A technology firm floated its shares today with an initial public offering (IPO). The prospectus
for the IPO notes that the firm plans to continue its zero payout policy (no dividends) in the near
future and reported annual earnings of £8 per share (these are the earnings as of today). The firm
has a return on equity (ROE) of 12% per year, which is expected to stay the same forever. It is
investors common belief that the appropriate discount rate is 10% per year and that in 4 years
time the firm will start distributing a dividend keeping the payout ratio constant after that. The
firm's closing share price today is £118.22. This trading price is the consensus valuation among
investors and analysts,

1. What is the payout ratio in year 4 and beyond implied by investors" valuation of the share
price today?

Areal estate agent is considering changing her cell phone plan. there are three plans to choose from, all of which involve a monthly service charge of $20. plan a has a cost of $.42 a minute for daytime calls and $.17 a minute for evening calls. plan b has a charge of $.52 a minute for daytime calls and $.15 a minute for evening calls. plan c has a flat rate of $80 with 275 minutes of calls allowed per month and a charge of $.38 per minute beyond that, day or evening.a. determine the total charge under each plan for this case: 150 minutes of day calls and 70 minutes of evening calls in a month. (do not round intermediate calculations. round your answer to 2 decimal places. omit the "$" sign in your response.)c. if the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal? (round each answer to the nearest whole number.include the indifference point itself in each answer.)d. suppose that the agent expects both daytime and evening calls. at what point (i.e., percentage of total call minutes used for daytime calls) would she be indifferent between plans a and b?