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 1) What is the abnormal earnings for year 1 2) As of January 1, year 1, what is the present value of the abnormal earnings for year 1 3)What is the book value at the end of year 1 4) What is the abnormal earnings for year 2 5) As of January 1, year 1, what is the present value of the abnormal earnings for year 2 6) What is the abnormal earnings for year 3 7) As of January 1, year 1, what is the present value of the abnormal earnings for year 3

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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  1) What is the abnormal earnings for year 1  2) As of January 1, year 1, what is the present value of the abnormal earnings for year 1  3)What is the book value at the end of year 1  4) What is the abnormal earnings for year 2  5) As of January 1, year 1, what is the present value of the abnormal earnings for year 2  6) What is the abnormal earnings for year 3  7) As of January 1, year 1, what is the present value of the abnormal earnings for year 3

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Year 1 2 3 . 1/1 12/31 12/31 12/31 Predicted EPS . $10 $10 $10 BV per share $80 . . . Dividends . $4

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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