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?