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Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earnings per share for the year, X1, is $10. The predicted dividends for X1 is $4. The predicted earnings per share for the year, X2, is $11. The cost of equity is 10% Predicted Earning per share Book value share per Predicted dividends What is the predicted abnormal earnings for year X2? O $7 O $6 O $2.40 January 1, X1 December 31, X1 $10 ? $4 $3.40 $70 December 31, X2 $11

Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earnings per share for the year, X1, is $10. The predicted dividends for X1 is $4. The predicted earnings per share for the year, X2, is $11. The cost of equity is 10% Predicted Earning per share Book value share per Predicted dividends What is the predicted abnormal earnings for year X2? O $7 O $6 O $2.40 January 1, X1 December 31, X1 $10 ? $4 $3.40 $70 December 31, X2 $11

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earnings per share for the year, X1, is $10. The predicted dividends for X1 is $4. The predicted earnings per share for the year, X2, is $11. The cost of equity is 10% January 1, X1 December 31, X1 $10 ? $4 Predicted Earning per share Book value per share Predicted dividends What is the predicted abnormal earnings for year X2? O $7 O $6 O $2.40 O $3.40 $70 December 31, X2, $11
Transcribed Image Text:Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earnings per share for the year, X1, is $10. The predicted dividends for X1 is $4. The predicted earnings per share for the year, X2, is $11. The cost of equity is 10% January 1, X1 December 31, X1 $10 ? $4 Predicted Earning per share Book value per share Predicted dividends What is the predicted abnormal earnings for year X2? O $7 O $6 O $2.40 O $3.40 $70 December 31, X2, $11
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