Josef Robien is valuing the common stock of BCB as of December 31st, 2017, when the book value per share is 10.62. In this effort, Robien has made the following assumptions: EPS will be 20% of the beginning BV per share for each of the next three years. BCB will pay cash dividends equal to 40% of EPS. At the end of three years, BCBscommon stock will trade at four times its book value. Beta for BCB is 0.7, the risk-free rate is 4.5%, and the equity risk premium is 5.0%.

a) Show that the 2020 RI is 1.6 and the continuing RI is 44.8.

b) Show that the value per share of BCB stock using a RI model is 49.8.