Question: I know the answer is 15.58, but I'm having trouble getting to it. Catapult Company has a current book value of $33 per share. As

I know the answer is 15.58, but I'm having trouble getting to it.

Catapult Company has a current book value of $33 per share. As the result of an innovative product, the company earned an ROE of 15 percent. An analyst studying Catapult has estimated that the 15 percent ROE will continue for the next three years. At that point, he is uncertain what will happen to ROE, but he does observe that prior to last year, the share price was at a persistent 10 percent premium over book value, and he assumes this will be the case at the end of his three-year forecast. However, management has maintained an average market value over book value of 35 percent. The firm has a dividend payout ratio of 30 percent and the analyst estimates the cost of equity to be 10 percent.

a. The share price premium to book value in the final year is:

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