The Digital Electronic Quotation System $($DEQS$)$ Corporation pays no cash dividends currently and is not expected to for the next five

years. Its latest EPS was $$18\mathrm{.}00,$ all of which was reinvested in the company. The firm's expected ROE for the next five years is $16\%$ per

year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year $6,$ the firm's ROE on new investments

is expected to fall to $11\%,$ and the company is expected to start paying out $30\%$ of its earnings in cash dividends, which it will continue

to do forever after. DEQS's market capitalization rate is $24\%$ per year.

Required:

a$.$ What is your estimate of DEQS's intrinsic value per share?

b$.$ Assuming its current market price is equal to its intrinsic value, what do you expect to happen to its price over the next year?

c$.$ What do you expect to happen to price in the following year?

d$.$ What is your estimate of DEQS's intrinsic value per share if you expected DEQS to pay out only $10\%$ of earnings starting in year $6?$

Complete this question by entering your answers in the tabs below.

What do you expect to happen to price in the following year?

Note: Do not round intermediate calculations. Round your dollar value to $2$ decimal places.