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

Booker,Inc.is a distributor of building supplies.Management for the company has developed the following forecasts of net income:
$\begin{array}{lccc}& \text { Forecasted}\\ \text { Year: }& \text { Net Income}\\2011& \$ 111,432 \\2012&\$ 131,490 \\2013& \$ 150,473 \\2014&\$ 178,379 \\2015& \$ 199,784 \\\end{array}$

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 January 1,2011.
b.Using the dividend discount model,compute the value of Booker as of January 1,2011.