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Calculate the residual income of ABC Company for the next 2 years (2019 and 2020). The following is information regarding the company: Market price of
Calculate the residual income of ABC Company for the next 2 years (2019 and 2020). The following is information regarding the company: Market price of stock at December 31, 2018 = $50 Book value per share at December 31, 2018 = $20 Annual EPS forecasts: 2019 = $2.35 2020 = $2.50 The companys dividend payout ratio is expected to remain constant at 60%. Given a cost of equity of 10%, compute the companys residual income for 2019 and 2020.
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