1. The following forecasts of earnings per share (EPS) and dividend per share (DPS) were made at the end of 2017 for a firm, ACME Inc., with a book value per share of $15.00:

	2018E	2019E	2020E	2021E	2022E
EPS	2.50	2.75	3.03	3.33	3.66
DPS	0.75	0.75	0.75	0.75	0.75

The firm has an equity cost of capital of 10 percent per annum.

A. Calculate book value per share for 2018 - 2022.

B. Calculate residual earnings per share for 2018 - 2022.

C. Calculate the year over year (YOY) forecasted EPS growth rates and residual earnings (RE) growth rates for the period 2018 - 2022.

D. Review the EPS & RE growth rate trends over the forecast horizon. Explain why the EPS is not the same as the RE growth rate.