Question: Reverse Engineering (Easy) A share traded at $26 at the end of 2009 with a price-to-book ratio of 2.0. Analysts are forecasting earnings per share

Reverse Engineering (Easy)

A share traded at $26 at the end of 2009 with a price-to-book ratio of 2.0. Analysts are forecasting earnings per share of $2.60 for 2010. The required equity return is 10 percent.

What is growth in residual earnings that the market expects beyond 2010?

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