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Alcatel is a French telecommunications firm, paid dividends per share of $0.72 on earnings per...

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Finance

Alcatel is a French telecommunications firm, paid dividends per share of $0.72 on earnings per share of $1.25 in 2000. The firms earnings per share had grown at 12% over the prior 5 years but the growth rate is expected to decline linearly over the next 10 years to 5%, while the payout ratio remains unchanged.

The beta for the stock is 0.8, the risk free rate is 5.1% and the market risk premium is 4%.

Value the stock using the H model:

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