Question
Year 1 2 3 . 1/1 12/31 12/31 12/31 Predicted EPS . $10 $10 $10 BV per share $80 . . . Dividends . $4
| Year | 1 | 2 | 3 | |
| . | 1/1 | 12/31 | 12/31 | 12/31 |
| Predicted EPS | . | $10 | $10 | $10 |
| BV per share | $80 | . | . | . |
| Dividends | . | $4 | $4 | $4 |
The discount rate is 10%, which makes the present value factor for one year - 0.90909; for two years - 0.8264; and for three years - 0.7513.
What is the abnormal earnings for year 1?
| a. | 1.818 |
| b. | 2.00 |
| c. | 3.64 |
| d. | 4.40 |
| e. | 4.88 |
As of January 1, year 1, what is the present value of the abnormal earnings for year 1?
| a. | 1.818 |
| b. | 2.00 |
| c. | 3.64 |
| d. | 4.40 |
| e. | 4.88 |
What is the book value at the end of year 1?
| a. | 6.50 |
| b. | 10 |
| c. | 86 |
| d. | 95 |
| e. | 107 |
|
|
What is the abnormal earnings for year 2?
1.818 b.2.00 c.1.4 d.1.157
As of January 1, year 1, what is the present value of the abnormal earnings for year 2?
| a. | 1.818 |
| b. | 2.00 |
| c. | 1.4 |
| d. | 1.157 |
| e. | 4.88 |
|
|
What is the abnormal earnings for year 3?
| a. | 2.00 |
| b. | 1.818 |
| c. | 0.80 |
| d. | 0.60 |
| e. | 9.20 |
|
|
As of January 1, year 1, what is the present value of the abnormal earnings for year 3?
| a. | 2.00 |
| b. | 1.818 |
| c. | 0.80 |
| d. | 0.60 |
| e. | 10 |
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Financial Trading And Investing
Authors: John Teall
3rd Edition
0323909558, 978-0323909556
