The risk$-$free rate of return is $8\%,$ the expected rate of return on the market

portfolio is $15\%,$ and the stock of Xyrong Corporation has a beta coefficient of

$1\mathrm{.}2.$ Xyrong pays out $40\%$ of its earnings in dividends, and the latest earnings

announced were $$10$ per share. Dividends were just paid and are expected to be

paid annually. You expect that Xyrong will earn an ROE of $20\%$ per year on all

reinvested earnings forever.

a$.$ What is the intrinsic value of a share of Xyrong stock?

b$.$ If the market price of a share is currently $$100,$ and you expect the market price

to be equal to the intrinsic value $1$ year from now, what is your expected $1-$year

holding$-$period return on Xyrong stock?