Sasha wants to evaluate the stock of Shebby Inc. She gathers the following information: Current book value per share = $11 ROE =15% Expected EPS for Years 1-5 is calculated as ROE times beginning book value per share. Dividend payout ratio = 30% Required rate of return on equity = 10% Calculate the stock's intrinsic value using the residual income model based on the assumption that: After Year 5, ROE will fall to 10%: (same as required rate of return on equity) so continuing residual income will fall to zero. From Year 5 onwards. ROE will remain at 15%, so yearly continuing residual income will remain constant at the Year 5 level into perpetuity. ROE will start to decline in Year 6 and beyond towards the required return on equity with a persistence factor of 0.6. ROE will decline to the long-run industry average and the stock will trade at a P/B multiple of 1.3 at the end of Year 5. Given that the stock is currently trading at $20, for each of the assumptions listed above comment on whether it is fairly valued, overvalued or undervalued