Question: 1. A firm whose equity traded at $41.67 per share at the end of 2004 in expected to earn $2.50 per share in 2005 and

1. A firm whose equity traded at $41.67 per share at the end of 2004 in expected to earn $2.50 per share in 2005 and $2.85 in 2006. The firm pays no dividends.

Set the long-term growth rate for residual earnings equal to the GDP growth rate of 4 percent. Given these forecasts, what is the rate of return you expect to earn from buying the shares?

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How accurate is this information (compared to information in Step 2)?

How influential does this public see itself as being within the organization?

How does or how might the key public affect your organization?