Use the following inputs and the finite horizon form of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007:

ROE will continue at 15% for the next five years (and 10% thereafter) with all earnings reinvested (no dividends paid).

Cost of equity = 10%

Bo = $10 per share (at year-end 2007)

Premium over book value at the end of five years will be 20%

What is the value of Southern Trust Bank shares as of 31 December 2007?

Clarification: Use Version 4 of multistage residual income valuation model.

Premium over book value at the end of five years equals answer.