Hi,

I have attached questions and I want their solutions.

Q.1 The following were extracted from a financial report for a 2008 fiscal year: Operating asset $165 Interest income $ 3.6 Operating liabilities $ 78 interest expense $ 5.8 Financial assets $40 Financial liabilities Comprehensive income $ 12 $60 The firm has a statutory tax rate of 35%. (a) What was operating income (after tax) for 2008? (b) Net payout to shareholders for 2008 was $ 6 million. What was common shareholders' equity at the beginning of 2008? Q.2 You have the following forecasts made at the end of 2014: 2015E EPS 2.46 DPS 2016E 2.96 2017E 3.04 2018E 2019E 3.54 3.90 1.00 Other information The dividend is expected to grow at 3% per year. The equity cost of capital for this firm is 13%. (a) Estimate the per-share value of equity at the end of 2014 using the abnormal earnings growth model, assuming 1-AEG after 2019 is constant. 2- AEG after 2019 is Zero. (b)Forecast the per-share value of equity at the end of 2018