The Generic Genetic (GG) Corporation pays no cash dividends currently and is not expected to for the next four years. Its latest EPS was $7.0, all of which was reinvested in the company. The firms expected ROE for the next four years is 27% per year, during which time it is expected to continue to reinvest all of its earnings. Starting in year 5, the firms ROE on new investments is expected to fall to 26% per year. GGs market capitalization rate is 26% per year.

a. What is your estimate of GGs intrinsic value per share? (Do not round intermediate calculations. Omit the "$" sign in your response. Round your answer to 2 decimal places.)

GGs intrinsic value $ ----------

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? (Omit the "%" sign in your response.)

Price should ------------- increase decrease at a rate of -------------% over the next year.