Question: As discussed in the chapter, abnormal earnings (AE) are AE t = X t (r e BV t1 ) where X t is the firm's

As discussed in the chapter, abnormal earnings (AE) are

AEt= Xt (re BVt1)

whereXtis the firm's net income,reis the cost of equity capital, andBVt-1is the book value of equity att 1.

Following areXt,BVt-1, andrefor two firms.

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