agulani

14.
ROE = NPM * TAT * FL = 0.04 * 2 * 2.5 = 0.2
g = b.ROE b = Retention Ratio

20% = 0.2 = b * 0.2
so b = 1 <-- Company retains everything
So Dividend payout = 1 - b = 0

15.
D0 = 3
D1 = 3 * 1.2 = 3.6
D2 = 3.6 * 1.2 = 4.32
D3 = 4.32 * 1.09 = 4.71

r = 6 + 1.2 ( 11-6) = 6 + 6 = 12%
P2 = D3 / (r-g) = 4.71 / (.12 - 0.09) = 196.96

Use CF function CF1 = 3.6, CF2 = 4.32 + 196.96 r=12%
and get stock value as: 163.67

CP