The risk$-$free rate of return Is $10\mathrm{.}0\%,$ the expected rate of return on the market portfolio is $20\%,$ and the stock of Xyrong Corporation

has a beta coefficient of $2\mathrm{.}6.$ Xyrong pays out $60\%$ of its earnings in dividends, and the latest earnings announced were $$25$ per share.

Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of $22\%$ per year on all

reinvested earnings forever.

Required:

a$.$ What is the intrinsic value of a share of Xyrong stock? $($Do not round Intermedlate calculations. Round your answer to $2$ decimal

places.$)$

b$-1.$ If the market price of a share is currently $$59,$ and you expect the market price to be equal to the intrinsic value one year from

now, calculate the price of the share after one year from now. $($Do not round Intermedlate calculatlons. Round your answer to $2$

decimal places.$)$

b$-2.$ What is your expected one$-$year holding$-$period return on Xyrong stock? $($Do not round Intermedlate calculatlons. Round your

answer to $2$ decimal places.$)$The risk$-$free rate of return is $10\mathrm{.}0\%,$ the expected rate of return on the market portfolio is $20\%,$ and the stock of Xyrong Corporation has a beta coefficient of $2\mathrm{.}6.$ Xyrong pays out $60\%$ of its earnings in dividends, and the latest earnings announced were $$25$ per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of $22\%$ per year on all reinvested earnings forever.

Required:

a$.$ What is the intrinsic value of a share of Xyrong stock? $($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$

b$-1.$ If the market price of a share is currently $$59,$ and you expect the market price to be equal to the intrinsic value one year from now, calculate the price of the share after one year from now. $($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$

b$-2.$ What is your expected one$-$year holding$-$period return on Xyrong stock? $($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$