The risk-free rate of return is 6.5%, the expected rate of return on the market portfolio is 18%, and the stock of Xyrong Corporation has a beta coefficient of 2.8. Xyrong pays out 30% of its earnings in dividends, and the latest earnings announced were $9.50 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) Intrinsic Value

B) Expected one year holding premium return