The Coca Cola Company current (fiscal year 2014) earnings per share are at $1.62. Its book value of equity per share is at $6.97 on Dec 31 2014. KO is trading on Dec 31 2014 at $42.76. It has 4.387 million shares outstanding. You project earnings per share and dividends per share for the years 2015-2019 to be as per the following table. Assume that the cost of equity for KO is at 10% per year Fiscal Year ending Dec 31 2015 2016 2017 2018 2019 Earnings 1.67 1.54 0.30 1.52 2.10 Dividends 1.23 1.36 1.44 1.52 1.58 a. Compute the book value, return on common equity and residual earnings for each of the years 2015-2019. b. Calculate the per-share value of the equity from the pro forma statements using the book value as an anchor. Assume that residual earnings will grow after 2019 at 4%. c. As a financial analyst, would you rate KO at year end 2014 as buy, hold or sell? Explain your answer. d. Provide one disadvantage for the residual earnings valuation method. The Coca Cola Company current (fiscal year 2014) earnings per share are at $1.62. Its book value of equity per share is at $6.97 on Dec 31 2014. KO is trading on Dec 31 2014 at $42.76. It has 4.387 million shares outstanding. You project earnings per share and dividends per share for the years 2015-2019 to be as per the following table. Assume that the cost of equity for KO is at 10% per year Fiscal Year ending Dec 31 2015 2016 2017 2018 2019 Earnings 1.67 1.54 0.30 1.52 2.10 Dividends 1.23 1.36 1.44 1.52 1.58 a. Compute the book value, return on common equity and residual earnings for each of the years 2015-2019. b. Calculate the per-share value of the equity from the pro forma statements using the book value as an anchor. Assume that residual earnings will grow after 2019 at 4%. c. As a financial analyst, would you rate KO at year end 2014 as buy, hold or sell? Explain your answer. d. Provide one disadvantage for the residual earnings valuation method