Drill Exercises E5.1. Forecasting Return on Common Equity and Residual Earnings (Easy) The following are earnings and dividend forecasts made at the end of 2012 for a firm with $20.00 book value per common share at that time. The firm has a required equity return of 10 percent per year. a. Forecast return of common equity (ROCE) and residual earnings for each year, 2013-2015. b. Based on your forecasts, do you think this firm is worth more or less than book value? Why? E5.2. ROCE and Valuation (Easy) The following are ROCE forecasts made for a firm at the end of 2010. ROCE is expected to continue at the same level after 2013. The firm reported book value of common equity of $3.2 billion at the end of 2010 , with 500 million shares outstanding. If the required equity return is 12 percent, what is the per-share value of these shares