1. Calculate the value of ABC using a residual income model if the current book value is $140 billion

• The cost of equity per CAPM is 9%; Shares outstanding is 5 billion
• The earnings for the next 3 years will be 70 billion, 75 billion, 79 billion and then it will grow at a constant rate of 2.5%
• The dividends expected for the next 3 years are 14 billion, 16 billion, and 18 billion and then they will grow at a constant rate of 2.5%