Booker, Inc Management Expects Net Income to Grow at a Rate of the Company

Booker, Inc. is a distributor of building supplies. Management for the company has developed the following forecasts of net income:
$\begin{array}{c}\begin{array}{l}\\\underline{\text { Year} } \\2011 \\2012 \\2013 \\2014 \\2015 \end{array}\begin{array}{l}\text { Forecasted}\\\underline{\text { Net Income}}\\\$ 111,432 \\\$ 131,490 \\\$ 156,473 \\\$ 178,379 \\\$ 199,784\end{array}\end{array}$

Management expects net income to grow at a rate of 7 percent per year after 2015 and the company's cost of equity capital is 14%. Management has set a dividend payout ratio equal to 25% of net income and plans to continue this policy. Booker's common shareholders' equity at January 1, 2011 is $544,902.
Required:
a. Using the residual income model, compute the value of Booker as of J anuary 1,2011 .
b. Using the dividend discount model, compute the value of Booker as of J anmary 1,2011 .