Question 5 Suppose you are at the beginning of 2013. The following table supplies data on earnings per share (EPS), book value per share (BVPS), and the Beta Inc.s return on equity (ROE). Beta Inc.s current stock price is $32.0 per share. EPS, BVPS and ROE of Beta Inc. (currency in $) a) (3 points) Calculate a normalized EPS for Beta Inc. by the method of historical average EPS and then calculate the P/E based on that estimate of normalized EPS.

b) (3 points) Calculate a normalized EPS for Beta Inc. by the method of average ROE and the P/E based on that estimate of normalized EPS.

Question 3

1. (4 points) Write down, in simple sentences, the major reasons/motivations behind reorganization of financial statements.

2. (6 points) Calculate (i) return on common equity (ROCE), (ii) return on net operating assets (RNOA), and (iii) Return on operating assets (ROOA), based on reorganized financial statements, for Beta Inc. in 2012. Assume the short-term interest rate is 1%.