Company Qs current return on equity (ROE) is 14%. It pays out one-half of earnings as cash dividends (payout ratio . Current book value per share is...

18. Company Q’s current return on equity (ROE) is 14%. It pays out one-half of earnings as cash dividends (payout ratio ô°€ .5). Current book value per share is $50. 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 0.8. The cost of capital is 11.5%.a. What are Q’s EPS and dividends next year? How will EPS and dividends grow in years 2, 3, 4, 5, and subsequent years?b.