Company Q’s current return on equity (ROE) is 13%. The firm pays out 45 percent of its earnings as cash dividends. (payout ratio = .45). Current book value per share is $53. 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 the payout ratio increases to .70. The cost of capital is 11.0%.This is for Part B I am not sure of my Answer. B) What is Q’s stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Stock worth per share $Puranjay0106 answersPlowback ratio = 1 –payout ratio = 1.0 –0.45 = 0.55Dividend growth rate = g= Plowback ratio × ROE = 0.55 × 0.13 = 0.0715ROE = EPS0/Book equity per shareEPS0 = 0.13*53 = $6.89DIV0= payout ratio × EPS0= 0.55× $ = $3.50after 4 year g = Plowback ratio × ROE = (1 –0.7) × 0.11 = 0.033Year EPS DIVIDENDS1 6.89*1.0715=7.38 7.38*0.45= 3.3212 6.89*1.07152=7.91 3.553 6.89*1.07153=8.47 3.8114 6.89*1.07154=9.08 4.0865 6.89*1.033*1.07154=9.38 9.38*0.7= 6.56