6. You have been provided the following actual financial information from the reformulated financial statements of Lillooet Inc. for the year 2021, and then a set of forecasted financial information for the three-year period, 2022 2024.

2021 Actual: sales = $800,000

Shareholders Equity = $50,000

2022 Forecasts: sales growth = 5%

operating profit margin after tax = 0.10

asset turnover ratio = 1.90

net financing expenses = $15,000

2023 Forecasts: sales growth = 5%

operating profit margin after tax = 0.10

asset turnover ratio = 2.0

net financing expenses = $15,500

2024 Forecasts: sales growth = 5%

operating profit margin after tax = 0.10

asset turnover ratio = 2.0

net financing expenses = $16,000

In conjunction, you have also been provided with the following additional information:

• the forecasted growth rate in comprehensive income after tax (CI) after 2024 is 2.5%
• Lillooets cost of equity capital is 9%
• Lillooets net borrowing cost (NBC) after tax is 4%
• Lillooet has no Other Comprehensive Income (OCI) items to report during any years
• Lillooet has 1 million common shares outstanding

Using the Abnormal Earnings (ReCI) valuation model, what is the intrinsic value of a common share of Lillooet Inc. based on the forecasts and additional information presented above?

	1.	$1.09
	2.	$1.35
	3.	$1.04
	4.	$0.84