Shunichi Kobayashi is valuing United Parcel Service (NYSE: UPS). Kobayashi has made the following assumptions:

• Book value per share is estimated at $ 9.62 on 31 December 2007.
• EPS will be 22 percent of the beginning book value per share for the next eight years.
• Cash dividends paid will be 30 percent of EPS.
• At the end of the eight - year period, the market price per share will be three times the book value per share.
• The beta for UPS is 0.60, the risk - free rate is 5.00 percent, and the equity risk premium is 5.50 percent.
• The current market price of UPS is $ 59.38, which indicates a current P/B of 6.2.

A. Prepare a table that shows the beginning and ending book values, net income, and cash dividends annually for the eight - year period.
B. Estimate the residual income and the present value of residual income for the eight years.
C. Estimate the value per share of UPS stock using the residual income model.
D. Estimate the value per share of UPS stock using the dividend discount model. How does this value compare with the estimate from the residual income model?