Using the residual income valuation model, compute the price per share based on the following information:
- The book value per share is currently $18.00, and it is estimated to be $19.50 in one year from today and $21.00 in two years from now.
- The consensus of earnings per share for next year is $3.75, and it is $4.25 in two years from now.
- The residual income is forecasted to be zero in the third year and thereafter.
- Based on the CAPM, the required rate of return on the firm is 12%

Question 13 options:

1)

$19.24

2)

$20.94

3)

$21.16

4)

$22.05