1) How to set up spreadsheet for problems given below. I do not know how it must be set up even.
Suppose that the company starts with book value per share of= 1000, its return on equity (ROE) is 15%, payout ratio is 50% and opportunity cost of capital is 10%.
a) Create the Excel spreadsheet to illustrate how book value per share, earning per share and dividends per share change over years.
b) Change values of ROE and payout ratio and show how stock price response.
2) Suppose that the company starts with the book value per share of= 1000, its return on equity (ROE) is 15% for first five years and then it becomes 10% and last everlastingly.
a) Create the Excel spreadsheet to illustrate how book value per share, earning per share and dividends per share change over years. You may suppose any values for payout ratios and opportunity cost of capital.
b) Compute stock price per share. Determine the value of PVGO?