$20$

References

When a stock is going through a period of nonconstant growth for $T$ periods, followed by constant growth forever, the

residual income model can be modified as follows:

$P_0={\displaystyle \underset{t=1}{\overset{T}{}}}\frac{EP{S}_t+B_{t-1}-B_t}{(1+k{)}^t}+\frac{P_T}{(1+k{)}^T}$

where:

$P_T=B_T+\frac{EP{S}_T(1+g)-B_{T}k}{k-g}$

Al's Infrared Sandwich Company had a book value of $$16\mathrm{.}95$ at the beginning of the year, and the earnings per share for the

past year was $$10\mathrm{.}65.$ Molly Miller, a research analyst at Miller, Moore & Associates, estimates that the book value and

earnings per share will grow at $22\mathrm{.}50$ and $21\mathrm{.}00$ percent per year for the next four years, respectively. After four years, the

growth rate is expected to be $6$ percent. Molly believes the required return for the company is $12\mathrm{.}20$ percent. What is the

value per share for Al's Infrared Sandwich Company?

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.