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The Generic Genetic (GG) Corporation pays no cash dividend currently and is not expected to for the next 4 years. Its latest EPS was $5,

The Generic Genetic (GG) Corporation pays no cash dividend currently and is not expected to for the next 4 years. Its latest EPS was $5, all of which was reinvested in the company. The firms expected ROE for the next 4 years is 20% per year, during which time it is expected to continue to reinvest all of its earnings. Starting 5 years from now, the firms ROE on new investments is expected to fall to 15% per year. GGs market capitalization rate is 15% per year. a. What is your estimate of GGs 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?

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