The shares of Nike, Inc., traded at $74 after its financial statements for fiscal year 2010 were

Question:

The shares of Nike, Inc., traded at $74 after its financial statements for fiscal year 2010 were published. The balance sheet reported book value per share of $20.15. Analysts were forecasting EPS of $4.29 for 2011 and $4.78 for 2012. A dividend of$1.16 was indicated for 2011. Your required return is 9 percent.

a. What is the forecast of the residual earnings growth rate after 2012 that is implicit in the market price?

b. What is the market's forecast of EPS for 2013 and 2014?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... 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...