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The beginning of the period book value of equity is $20 per share. Earnings per share are forecasted to be $$2.50, $3.00, $3.35, and $3.80
The beginning of the period book value of equity is $20 per share. Earnings per share are forecasted to be $$2.50, $3.00, $3.35, and $3.80 for years 1-4 respectively. Dividends per share are forecasted to be $0.25, $0.3, $0.35, and $0.4 for years 1-4 respectively. The cost of equity capital is 6%, the cost of debt capital is 4%, and the weighted average cost of capital is 5%. What is year 3 residual income?
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