Consider the following pro forma for International Business Machines (IBM) based on analysts' forecasts in early 2003.
Question:
The book value of IBM's common equity at the end of 2002 was $23.4 billion, or $13.85 per share. Use a required return for equity of 12 percent in calculations.
a. Forecast residual earnings for each of the years 2003-2007.
b. Forecast abnormal earnings growth for each of the years 2004-2007.
c. Show that abnormal earnings growth is equal to the growth in residual earnings for everyyear.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: