Residual income models are used in equity valuation to estimate the intrinsic value of a company's stock. This valuation approach focuses on the company's ability to generate returns over and above its required return on equity. In order to use the residual income model effectively, one must understand how to calculate the residual income and its impact on valuation. The formula for residual income is:

Residual Income = Net Income - (Equity Capital × Cost of Equity)

Given this context, what is the primary purpose of the residual income model in equity valuation?