Castovans assignment is to determine the intrinsic value of TTCI using both a single-stage and a multistage RI model. selected data and assumptions for TTCI are presented in Exhibit 2.

Exhibit 2 tantechi ltd. (TTCI) selected Financial data and assumptions

book value per share 45.25

market price per share 126.05

Constant long-term ROE 12.00%

Constant long-term earnings growth rate 4.50%

Cost of equity 8.70%

For the multistage model, Castovan forecasts TTCIs ROE to be higher than its long-term roe for the first three years. Forecasted earnings per share and dividends per share for TTCI are presented in exhibit 3. Starting in Year 4, Castovan forecasts TTCIs ROE to revert to the constant long-term roe of 12% annually. The terminal value is based on an assumption that residual income per share will be constant from Year 3 into perpetuity.

Exhibit 3: Tantechi (TTCI) Earnings and Dividend Forecast
	Year 1	Year 2	Year 3
EPS ()	7.82	8.17	8.54
Dividends per share ()	1.46	1.53	1.59

Based on exhibits 2 and 3 and the multistage RI model, Castovan should estimate the intrinsic value of TTCI to be closest to:

Answers:	54.88.
	83.01.
	85.71.