Bluejacket Manufacturing plans to retain 75 percent of

Bluejacket Manufacturing plans to retain 75 percent of earnings at the end of each of the next four years to finance new investments offering a rate of return on equity ROE of 30 percent. Security analysts’ consensus forecast for Bluejacket’s earnings per share at the end of this year (at date 1) is $3.00. Beginning with the end of year five (date 5) and continuing in perpetuity (forever), the firm plans to cut the retention rate to 60 percent of earnings. Assuming the required return for Bluejacket’s stock is 11.5 percent and that the ROE for the firm’s new investments is expected to fall to 12.5 percent at date 5 and to remain constant from that date on, determine the current (date 0) value of Bluejacket’s stock.