Calculating Residual Income Valuation for ABC Corporation

ABC Corporation is a technology firm currently demonstrating strong growth in its earnings. Over the last year, the firm reported earnings of $30 million and expects a growth rate of 10% per annum for the next 5 years due to an expanding market and innovative product development. The firm utilizes a cost of equity of 12% and has a book value of equity of $200 million.

After 5 years, the growth rate is expected to stabilize at 3%. The management is keen on understanding the firm’s residual income to assess its value properly. The residual income for a period is defined as the net income of the firm less the equity charge, which is the cost of equity multiplied by the book value of equity at the beginning of the period.

What is the intrinsic value of ABC Corporation per share using the Residual Income Valuation method, given that there are 10 million shares outstanding?