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Q1. Assume that a company starts with a book value per share of 1000, its return on equity (ROE) is 15%, payout ratio is 50% and the opportunity cost of capital is 10%.

a) Build an Excel spreadsheet to show how book value per share, earning per share and dividends per share change over years.

b) Change the values of ROE and payout ratio and illustrate how the stock price response.

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