Essay About Forward P And B. Value

Financial Statement
Financial Statement
M 5.3
Forward P/E= price per share/forecast of next year’s EPS=$63.2/$4.54=13.92
BPS=$5,224/420.9=$12.41
P/B=$63.2/$12.41=5.09
C. Value=Book value of 2009+continuing value= $17.06+75.78=$92.84
D. Re=0.05+0.6*0.05=8%
When required rate of return is 10%,
1. Price = $63.2, BPS = $12.41,
Residual Earning = Actual earnings – Expected Earnings
Based on previous calculation:
RE for 2008 = $4.54 – 9%* $12.41 = $3.42
RE for 2009 = $3.643
CV = (3.643* growth rate)/ 1.188* (1.09 – g)
After calculation, growth rate = 2%
2. RE for 2010 = $3.643* 1.02 = $ 3.716
Earnings