Question 2 (50 points) The following forecasts of earnings per share (EPS) and dividend per share (DPS) were made for 2017-2021. The firm reported book value per share of$5 at the end of 2016, and the number of shares outstanding is 1 millions. The firm has an equity beta of0.5, the 10-year government bond rate is 4%, and the market nsk premium is 12%. The continuing value based on GDP growth rate of 4%. In this case, The growth rate in residual eamings will continue into the future. 020F Eamings Dividends Book value ROCE 119 1.36 1.74 1.54 .35 .40 24 27 31 Required Residual ings Growth in RE Growth in Book value Discount factor PV of RE Total PV to 021 Continuing value (CV) Present valuc of CV Value per a. Calculate the required return on equity b. Forecast book value per share, return on common equity (ROCE), residual earnings, growth rates for book value and growth in residual earnings for each of the years 2017-2021. c. Using the residual earnings method, calculate the per-share value of the equity. d. What is the P/B ratio