Company Q's current return on equity (ROE) is 14%. It pays out earnings as cash dividends using a payout ratio of 0.50. Current book value per share is $60. 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 11.5% and the payout ratio increases to 0.90. The cost of capital is 11.5%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)