Discuss the following statements. Which of them are right and which are wrong? Explain your answer

a)Because you need to forecast future dividend to compute residual earnings, you cannot use the residual earnings model for companies that do not pay dividends.

b)Many analysts would have preferred that companies used economic ('correct') depreciation instead of linear depreciation.

c)An accounting item (balance sheet and/or income statement item) categorized as

"operating" for one company can be a financial item for another company.

d)It is possible that an increase in return on common equity (ROCE) may NOT be associated

with an increase in the value of the equity.

e)If residual earnings are expected to be constant in all future years, you can simply capitalize the forecast of next year's earnings to get the value of the equity.