The risk-free rate of return is 6.0%, the expected rate of return on the market portfolio is 18%, and the stock of Xyrong Corporation has a beta coefficient of 1.7. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $18 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 24% per year on all reinvested earnings forever.
Required:
a. What is the intrinsic value of a share of Xyrong stock?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
b-1. If the market price of a share is currently $69, and you expect the market price to be equal to the intrinsic value one year from now, calculate the price of the share after one year from now.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.