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 $$16\mathrm{.}00,$ all of which was reinvested in the company. The firm's expected ROE for the next five years is $19\%$ 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 $14\%,$ and the company is expected to start paying out $20\%$ 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 $20\%$ of earnings starting in year $6?$

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

Required B $,$ Required C

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

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

Intrinsic value

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

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

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

Required A Required B

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.

Price in two years

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What is your estimate of DEQS's intrinsic value per share if you expected DEQS to pay out only $20\%$ of earnings starting in

year $6?$

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