Exhibit 13.6 presents selected hypothetical data from projected financial statements for Steak 'n Shake for Year +1 to Year +11. The amounts for Year +11 reflect a long-term growth assumption of 3%. The cost of equity capital is 9.34%. Assume net income and comprehensive income will be identical.

REQUIREDa. Compute the value of Steak 'n Shake as of January 1, Year +1, using the residual income model.b. Repeat Requirement a using the present value of expected free cash flows to the common equity shareholders.c. Repeat Requirement a using the dividend discount model.d. Identify the reasons for any differences in the valuations in Requirements a, b, and c.e. Suppose the market value of Steak 'n Shake on January 1, Year +1, is $309.98 million.

Based on your valuations in Requirements a, b, and c, what is your assessment of the market value of this firm?

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Exhibit 13.6 Steak 'n Shake Selected Financial Information (amounts in millions; allow for rounding) (Problem 13.18) Year +1 Year +2 Year +3 Year +4 Year +5 Year+6 Year+7 Year +8 Year +9 Year +10 Year +11* Common equity, beginning of year $ 165.8 $177.6 $192.0 $206.0 $216.6 31.8 $227.7 $234.2 36.8 $238.1 $239.4 $255.8 $269.5 Net income 24.5 25.8 27.6 29.6 34.2 39.5 53.9 57.0 58.7 Dividends (12.7) (11.4) (13.6) (19.0) (20.8) (27.7) 32.9) (38.2) (37.4) (43.3) (50.6) Common equity, end of year $177.6 $192.0 $206.0 $216.6 $227.7 $234.2 $238.1 $239.4 $255.8 $269.5 $277.6 Cash flow from $ 45.4 $ 51.2 $ 56.3 $ 61.5 $ 67.1 $ 72.9 $ 78.9 $ 85.2 $ 85.6 $ 92.4 $ 73.2 operations Cash flow for investing Cash flow for (35.2) (41.1) (41.9) (42.7) (43.5) (44.4) (45.2) (46.0) (47.3) (48.1) 22.1) long-term debt (0.5) 2.0 1.0 (2.0) Cash flow for dividends (12.7) (11.4) (13.6) (19.0) (20.8) (27.7) $ 0.8 32.9) (38.2) (37.4) (43.3) (50.6) Net change in cash $ (3.0) $ 0.7 $ 0.8 $ 0.8 $ 0.8 $ 0.8 $ 1.0 $ 0.9 $ 1.0 $ 0.5 "The amounts for Year +11 resut from incresing each income statement and balance sheet amount by the epected longem growth rate d 3% and then deiving the amounts for the tatement od cah flows "Amounts on this line may reflect the effects of rounding ofintemedate amputaiors.