Bugg Properties' expected EPS is $2.00, $2.50, and $4.00 for the next three years, respectively. Analysts expect that Bugg will pay dividends of $1.00, $1.25, and $12.25 for the three years. The last dividend is anticipated to be a liquidating dividend; analysts expect Bugg will cease operations after Year 3. Bugg's current book value is $6.00 per share, and its required rate of return on equity is 10 percent.

a) Calculate per-share book value and residual income for the next three years. (1 marks)

b) Estimate the stock's value using the residual income model. (3 marks)