Will price go to $3 after merger ? AFG, page-112

If you use the Roger Montgomery intrinsic valuation formula that takes in account the pay-out ratio and ROE compounding over time you get an intrinsic value of $3.75 with the following assumptions:

Equity per share = $0.67
Return on Equity = 27% (lowest in the past 4 years)
Payout ratio = 60% (roughly what the company has been paying out on average)
Required rate of return = 8% (market return over time, could be reduce with lower interest rates)

Disclaimer: There is a weird growth number he uses to compound the ROE. RM claims that he has statistical evidence but refuses to release it. I much prefer to do DCF valuations but I like playing around with other peoples ways to calculate valuation for fun.