Company Q’s current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $62. Book value per share will grow as Q...

Company Q’s current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60).

Current book value per share is $62. Book value per share will grow as Q reinvests earnings.

Assume that the ROE and payout ratio stay constant for the next three years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.70.

The cost of capital is 11%.

What is Q’s stock worth per share?