Use the information to answer questions 19 and 20.

An analyst is

conducting a valuation of Makhahleng Limited pays 45% of its earnings as

dividends and is expected to exhibit a ROE of 15% over the next three years.

The book value per share of Makhahleng is currently R54.20, the required return

on equity is 10% and annual earnings per share are R18, R20 and R22 for year 1,

year 2 and year 3 respectively. Thereafter, the residual income will remain

constant forever at year 3’s residual income.