A companys current ROE is 12%. It pays out one-half of its earnings as cash dividends. Current book value is $20 and all reinvestments in the business will also produce a 12% return.

If the cost of capital is 8%, what is the appropriate current share price? What is the expected share price after five years?

If the cost of capital is 15%, what is the appropriate current share price? What is the expected share price after five years?