35. You forecast future Returns on Equity as shown on the Exhibit. Beginning in 2023, ROE is expected to decline to 16% and then proceed through a cycle and reach a steady state, long-term ROE of 15% in 2028. PACCARs payout ratio is forecast to remain at 50% in the future. The consensus Rate of Return on PACCAR common is 8.50%. At the end of the forecast horizon, the premium of intrinsic value over book value is forecast to be 40%. Calculate the Intrinsic Value of a share of common and round to one cent.

IV₀:

36. Rather than forecast the premium of intrinsic value over book value, Book Value is forecast to grow at a constant 2.50% beginning in 2029. Calculate the Intrinsic Value of a share of common and round to one cent.

IV₀:

Exhibit II: PACCAR Data: Exhibit II: PACCAR Data