Answer the following questions:

a$.$ Compute the value$-$to$-$book ratio as of January $1,$ Year $+1,$ using the residual ROCE

valuation method.

b$.$ Using the analysis developed in a$),$ prepare an exhibit summarizing the following ratios

for Steak $\text{'}n$ Shake as of January $1,$ Year $+1$ :

$$ Value$-$to$-$book ratio $($using amounts from a$))$

Market$-$to$-$book ratio

Value$-$earnings ratio, using reported earnings for Year $0$ of $$21\mathrm{.}8$ million

Price$-$earnings ratio, using reported earnings for Year $0$ of $$21\mathrm{.}8$ million

c$.$ Use reverse engineering to solve for the long$-$run growth rate in continuing residual

income in Year $+11$ and beyond that is implicitly impounded in the market value of Steak

$\text{'}n$ Shake on January $1,$ Year $+1.$ Use the $9\mathrm{.}34\%$ cost of equity capital and the projected

earnings amounts for Year $+1$ to Year $+10$ before solving for the long$-$run growth rate in

continuing residual income.Computing Residual Income: The following presents hypothetical data from projected financial statements for Steak $$n Shake for Year $+1$ to Year $+11.$ The amounts in Year $+11$ reflect a long$-$term growth assumption of $3\%.$ The cost of equity capital is $9\mathrm{.}34\%.$ Assume net income and comprehensive income will be identical. The market value of common shareholders$$ equity in Steak $$n Shake on January $1,$ Year $+1,$ is $$309\mathrm{.}98$ million.

Answer the following questions:

a$.$ Compute the value$-$to$-$book ratio as of January $1,$ Year $+1,$ using the residual ROCE valuation method.

b$.$ Using the analysis developed in a$),$ prepare an exhibit summarizing the following ratios for Steak $$n Shake as of January $1,$ Year $+1$:

o Value$-$to$-$book ratio $($using amounts from a$))$

o Market$-$to$-$book ratio

o Value$-$earnings ratio, using reported earnings for Year $0$ of $$21\mathrm{.}8$ million

o Price$-$earnings ratio, using reported earnings for Year $0$ of $$21\mathrm{.}8$ million

c$.$ Use reverse engineering to solve for the long$-$run growth rate in continuing residual income in Year $+11$ and beyond that is implicitly impounded in the market value of Steak $$n Shake on January $1,$ Year $+1.$ Use the $9\mathrm{.}34\%$ cost of equity capital and the projected earnings amounts for Year $+1$ to Year $+10$ before solving for the long$-$run growth rate in continuing residual income.