Please correct answer and don't use hand raiting Company Q's current return on equity (ROE) is 13%. It pays out 45 percent of earnings as cash dividends (payout ratio = 0.45). Currentbook value per share is $63. Book value per share will grow as Q reinvests earnings.Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 11.0% and thepayout ratio increases to 0.75. The cost of equity is 11.0%.a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5?b. What is Q's stock worth per share?Complete this question by entering your answers in the tabs below.Required ARequired BWhat are Q's EPS and dividends in years 1, 2, 3, 4, and 5?Note: Do not round intermediate calculations. Round your answers to 2 decimal places.YearEPSDividends1$7.83 $3.522$8.87 $3.993$9.98 $4.494$11.30 $5.095< Required ARequired B >

Initial Calculation for Year 1:Calculate the Earnings Per Share (EPS) by multiplying the Return on…

Answered: Company Q's current return on equity…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

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