Use the following inputs and the finite horizon from of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007: Marks 12

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

Beginning period book value at year-end 2007 is $10