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no.1 . Forecasting Return on Common Equity and Residual Earnings {Easy}
The following are earnings and dividend forecasts made at the end of 2012 for a firm with $20.0fi book value per common share at that time. The firm has a required equity return of
10 percent per year. 2013 2014 2015 EPS EDD 3.50. «$.10
DPS [1.25 I125 [130 a. Forecast return of semen equity {ROCE} and residual earnings for each year,
2013—2015. I 13. Based on your forecasts, do you think this firm is Worth more or less than book value? '1'! IL- J'l

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A.The Earnings per Share and Dividends per Share is given in the question. The Book Value per Share is computed = BVPS prior... View the full answer

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