Black Hills Corporation is a diversified energy corporation and a public utility holding company. The following gives the firm's earnings per share and dividends per share for the years 2000-2004

Suppose these numbers were given to you at the end of 1999, as forecasts, when the book value per share was $9.96, as indicated. Use a required return of 11 percent for calculations below.
a. Calculate residual earnings and return of common equity (ROCE) for each year, 2000-2004.
b. Value the firm at the end of 1999 under the assumption that the ROCE in 2004 will continue at the same level subsequently. Would you call tills a Case 1, Case 2, or Case 3 valuation?
c. Based on your analysis, give a target price at the end of2004.

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1999 2000 2.39 1.06 2001 2002 2.28 1.16 2003 EPS OPS BPS 3.45 1.12 2004 1.71 1.24 2.00 9.96