The following are earnings and dividend forecasts made at the end of 2009 for a rm with $20.00 book value per common share at that
The following are earnings and dividend forecasts made at the end of 2009 for a rm with $20.00 book value per common share at that time. The rm has a required equity return of 10 percent per year
| 2010 | 2011 | 2012 | |
| EPS | 3 | 3.6 | 4.1 |
| DPS | 0.25 | 0.25 | 0.3 |
a. Forecast return of common equity (ROCE) and residual earnings for each year, 20102012.
b. Based on your forecasts, do you think this rm is worth more or less than book value? Why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Authors: CFP Board
2nd Edition
1119094968, 978-1119094968
