Reference no: EM133275085

Mask Inc., the world's largest manufacturer of implantable biomedical devices, reported earnings per share in 1993 of $3.95, and paid dividends per share of $0.68. Its earnings are expected to grow 16% from 1994 to 1998, but the growth rate is expected to decline each year after that to a stable growth rate of 6% in 2003. The payout ratio is expected to remain unchanged from 1994 to 1998, after which it will increase each year to reach 60% in a steady state. The stock is expected to have a beta of 1.25 from 1994 to 1998, after which the beta will decline each year to reach 1.00 by the time the firm becomes stable. (The treasury bond rate is 6.25%.) Assuming that the growth rate declines linearly (and the payout ratio increases linearly) from 1999 to 2003, estimate the dividends per share each year from 1994 to 2003, the expected price at the end of 2003 and also the value per share, using the three-stage dividend discount model.