An analyst is tasked with valuing Beta Industries and plans to use the abnormal earnings model to perform the valuation. The analyst inspected the Statement of Shareholders' Equity and found that the book value per share is $100. After some contemplation, the analyst arrived at the following forecasts on a per-share basis.

Year 1 2 3

Predicted EPS............................. $15 $15 $15

Normal earnings......................... ? ? ?

Abnormal earnings...................... ? ? ?

Present value factor (10 percent).. 0.9090 0.8264 0.7513

Present value of abnormal earnings ? ? ?

Dividends per share..................... $4 $4 $4

Required: 1. What is the Abnormal Earnings for year 1?

2. What is the present value of the Abnormal Earnings for year 1?

3. What is the forecasted Book Value at the end of year 1, which is the same as the beginning of year 2?

4. What is the Abnormal Earnings for year 2?