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You have estimated a companys cost of equity and made earnings and dividend forecasts: Cost of equity 10% Expected return on equity during the current

You have estimated a companys cost of equity and made earnings and dividend forecasts:

Cost of equity

10%

Expected return on equity during the current year

20%

Current book value of equity per share

$20

Based on this information, what residual income per share would you expect this company to have during the current year?

-$2

$0

+$1

+$2

None of the other answers are correct

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