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Question: The equity of a firm trades at 2.6 times book value of $239.0 million at the end of 2012 and your required return is

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The equity of a firm trades at 2.6 times book value of $239.0 million at the end of 2012 and your required return is 9 percent. The forward earnings forecast for 2013 is $33.46 million and the firm pays no dividends.

What is the forecast of earnings for 2014, 2015, 2016, 2017 that is implied by the market price?

Calculate the year wise EPS growth from 2013 to 2017 and indicate the buy and sell zones on the graph.

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