A pharmaceutical company has a cost of equity of 5.1%. In 2020 its ROE was 16.4% and the company expects this to remain constant over the next 19 years, at which point its patents will expire, and its ROE will decline towards its cost of equity with a persistence factor of 0.6. It's expected book value 19 years from now is $637. What is the terminal value of the residual income from 2039 onwards, as at 2039.Note: You don't need to calculate the present value of the terminal value, or the intrinsic value of the share. Just calculate the terminal value, using the formula based on a persistence factor.
a.$159.00
b.$159.60
c.$158.30
d.$157.802.
