The foillowing are earnings and dividend forecasts made at the end of 2012 for a firm with $20.00 book value per common share at that time. The firm has a required equity return of 10% a year.

1.Forecast return on common equity (ROCE) and residual earnings for each year, 2013-2015.

2.Based on your forecasts. Do you think this firm is worth more or less than book value? Why?

The foillowing are earnings and dividend forecasts made at the end of 2012 for a firm with $20.00 book value per common share at that time. The firm has a required equity return of 10% a year. 2013 2014 2015 Eps S 3.00 S 3.60 S 4.10 DPS S 0.25 S 0.25 S 0.30 Forecast return on common equity (ROCE) and residual earnings for each year, 2013-2015. Based on your forecasts. Do you think this firm is worth more or less than book value? Why