Nextbig Corp. currently has sales of$870million; sales are expected to grow by 26% next year (year 1). For the year after next (year 2), the growth rate in sales is expected to equal 13%. Over each of the next 2 years, the company is expected to have a net profit margin of11%and a payout ratio of56%,and to maintain the common stock outstanding at25.73

million shares. The stock always trades at a P/E of13.02times earnings, and the investor has a required rate of return of21%.Given this information:

a. Find the stock's intrinsic value (its justified price).

b. Use the IRR approach to determine the stock's expected return, given that it is currently trading at$39.15per share.

c. Find the holding period returns for this stock for year 1 and for year 2.