In 2000, Enron enjoyed remarkable success in the capital markets. During that year, Enrons shares increased in value by 89%, while the S&P 500 index fell by 9%. At the end of 2000, Enrons shares were trading at roughly $83 per share, and all of the sell-side analysts following Enron recommended the shares as a buy or a strong buy. With 752.2 million shares outstanding, Enron had a market capitalization of $62,530 million and was one of the largest firms Enron had a market capitalization of $62,530 million and was one of the largest firms (in terms of market capital) in the United States. At year-end 2000, Enrons book value of common shareholders equity was $11,470 million. At year-end 2000, Enron posted earnings per share of $1.19. Among sell-side analysts following Enron, the consensus forecast for earnings per share was $1.31 per share for 2001 and $1.44 per share for 2002, with 10% earnings growth expected from 2003 to 2005. At the time, Enron was paying dividends equivalent to roughly 40% of earnings and was expected to maintain that payout policy. At year-end 2000, Enron had a market beta of 1.7. The risk-free rate of return was 4.3%, and the market risk premium was 5.0%. (Note: The data provided in this problem, and the inferences you draw from them, do not depend on foresight of Enrons declaring bankruptcy by the end of 2001.)

Reverse engineer Enrons $83 share price to solve for the implied expected return on Enron shares at year-end 2000. Do the reverse engineering under the following assumptions: (1) Enrons market price equals value. (2) The consensus analysts earnings-per-share forecasts through 2005 are reliable proxies for market expectations. (3) Enron will maintain a 40% dividend payout rate. (4) Beyond 2005, Enrons long-run earnings growth rate will be 3.0%.

Please include details on how the reverse engineering numbers are calculated.