Part I: Abnormal Earnings Growth (AEG) Valuation Model Exercises Remember, to earn credit for the problem set, you must show your work. Simply writing down final answers is not acceptable 1. In its 2012 10-K, IBM reported a book value of $19.77 per share. Analysts forecasted earnings per share of $14.22 for fiscal 2013 and $15.90 for fiscal 2014. IBM's net dividend payout ratio is 21%. The analysts expect that EPS will grow 11% annually from 2015-2017. The cost of equity capital is 10%. a) Calculate residual earnings for each year (2013-2017). b) Calculate abnormal earnings growth (in dollars) for each year (2013-2017). c) Show that abnormal earnings growth is equal to the change in residual earnings for every year. Part I: Abnormal Earnings Growth (AEG) Valuation Model Exercises Remember, to earn credit for the problem set, you must show your work. Simply writing down final answers is not acceptable 1. In its 2012 10-K, IBM reported a book value of $19.77 per share. Analysts forecasted earnings per share of $14.22 for fiscal 2013 and $15.90 for fiscal 2014. IBM's net dividend payout ratio is 21%. The analysts expect that EPS will grow 11% annually from 2015-2017. The cost of equity capital is 10%. a) Calculate residual earnings for each year (2013-2017). b) Calculate abnormal earnings growth (in dollars) for each year (2013-2017). c) Show that abnormal earnings growth is equal to the change in residual earnings for every year