Apply the Residual Earnings Model (Ch-5) to the data below to estimate the Stock Value. Discount rate is >> 10.50% 1) 10Pts Assume Residual Earnings for Year t=4 and after remains constant $ amount at the t=3 level you calculated ('g'=0). (2) 4 pts What's new Stock $ estimate if now starting at Yr t=4, Resid. Earns grows from t =3 $ level at constant 3.40% Current Forecast Forecast Forecast Forecast Exam-2 due Oct-29 t = 0 t=1 t=21 t = 3 EARINGS PER SHR $ 5.00 $ 5.65$ 6.15$ 6.65 DIVIDEND $ 1.50 $ 1.75$ 1.85$ 2.00 BOOK VALUE $ 46.00 $ 49.90$ 54.20 $ 58.85 RET ON EQUITY 0.1050 Part-1 Stock Value >> t=2 t = 3 t=4 Part 2 Annual growth after t=3 => Discount Factor for PV > $ 3.40% 0.1050 t=1 5.650 $ 1.750 $ 49.90 $ $ $ 6.150 $ 1.850 $ 54.20 $ 6.650 2.000 58.85 Value incl growing CV > Exam-2 due Oct-29 Apply the Residual Earnings Model (Ch-5) to the data below to estimate the Stock Value. Discount rate is >> 10.50% 1) 10Pts Assume Residual Earnings for Year t=4 and after remains constant $ amount at the t=3 level you calculated ('g'=0). (2) 4 pts What's new Stock $ estimate if now starting at Yr t=4, Resid. Earns grows from t =3 $ level at constant 3.40% Current Forecast Forecast Forecast Forecast Exam-2 due Oct-29 t = 0 t=1 t=21 t = 3 EARINGS PER SHR $ 5.00 $ 5.65$ 6.15$ 6.65 DIVIDEND $ 1.50 $ 1.75$ 1.85$ 2.00 BOOK VALUE $ 46.00 $ 49.90$ 54.20 $ 58.85 RET ON EQUITY 0.1050 Part-1 Stock Value >> t=2 t = 3 t=4 Part 2 Annual growth after t=3 => Discount Factor for PV > $ 3.40% 0.1050 t=1 5.650 $ 1.750 $ 49.90 $ $ $ 6.150 $ 1.850 $ 54.20 $ 6.650 2.000 58.85 Value incl growing CV > Exam-2 due Oct-29