At the end of 2021, the shares of CheapFoods Ltd, a supermarket company, traded at $13.00 each. In its 2021 annual report, CheapFoods had reported total assets of $8,000 million and total liabilities of $3,000 million with 2,000 million shares outstanding. The analyst forecasts of future earnings per share are $0.75 for fiscal year 2022 and $0.80 for 2023. CheapFoods Ltd pays a dividend of 40 cents per share.

Required:

(a) Estimate the per-share value of CheapFoods Ltd at the end of 2021 using the residual earnings model based on the analysts forecasts, with an additional forecast that residual earnings will grow at the anticipated GDP growth rate of 1.7 percent per year after 2023. CheapFoods Ltd has a beta of 0.9, a market-risk premium of 6.5% and a risk-free rate of 3%. ( 8 marks)