Question: E14.1. An SF2 Forecast and a Simple Valuation (Easy) An analyst calculates residual operating income of $35.7 million from financial statements for 2009, using a

E14.1. An SF2 Forecast and a Simple Valuation (Easy) An analyst calculates residual operating income of $35.7 million from financial statements for 2009, using a required return for operations of 10 percent. She also forecasts residual operating income at the same level for 2010 and years after on set operating assets of $1,257 million at the end of 2009.

a. What is the analyst's forecast of operating income for 2010?

b. What is the value of the operations based on these forecasts?

c. What is the forward enterprise P/E ratio implied by the forecasts?

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