The following forecasts of earnings per share (EPS) and dividend per share (DPS) were made at the

Question:

The following forecasts of earnings per share (EPS) and per share (DPS) were made at the end of 2009 for a firm with a book value per share of $22.00:

The following forecasts of earnings per share (EPS) and dividend

The firm has an equity cost of capital of 12 percent per annum.
a. Calculate the residual earnings that are forecast for each year, 2010 to 2014.
b. What is the per-share value of the equity at the end of 2009 based on me residual income valuation model?
c. What is the forecasted per-share value of the equity at the end of the year 2014?
d. What is the expected premium in2014?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...