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Forecasting Earnings Growth and Abnormal Earnings Growth (Easy) The following are earnings and dividend forecasts made at the end of 2010. The firm has a

Forecasting Earnings Growth and Abnormal Earnings Growth (Easy) The following are earnings and dividend forecasts made at the end of 2010. The firm has a required equity return of 10 percent per year. a. Forecast the ex-dividend earnings growth rate and the cum-dividend earnings growth rate for 2012 and 2013. b. Forecast abnormal earnings growth (in dollars) for 2012 and 2013. c. Calculate the normal forward P/E for this firm. d. Based on your forecasts, do you think this firm will have a forward P/E greater than its normal P/E? Why

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