You are valuing Signet Bank during a period of substantial uncertainty about future regulatory rules. Signet Bank generated \($100\) million in net income last year on a book value of equity of \($1\) billion and paid out \($70\) million in dividends. While you expect Signet to be a stable growth company, you envision the following regulatory scenarios for the future:

Status quo—no changes in regulatory rules (40% probability):

Signet will continue to generate its current return on equity in perpetuity and maintain its existing dividend payout ratio.

Regulatory easing—lower regulatory capital ratios (25 percent probability): Signet will be able to generate a return on equity of 12 percent on future investments, while maintaining its stable growth rate (at status quo levels).

Regulatory tightening—higher regulatory capital ratios (35 percent probability): Signet will see its return on equity drop to 9%, while maintaining its stable growth rate (at status quo levels).

Estimate the value of equity in Signet Bank under each scenario.

(You can leave current net income unchanged under all scenarios.)

Given the probabilities of each scenario unfolding, estimate the value of equity in Signet Bank today.