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What will be the estimated residual earnings

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Reference no: EM132659890

Problem 1: Suppose you forecast a firm's comprehensive earnings to be $16 million for 2019 and $20 million for 2020, and you also expect the firm to maintain its current dividend payout ratio of 25% over this period. If the firm has shareholders' equity of $100 million and an expected return of 10%, what will be the estimated residual earnings for 2019 and 2020, respectively?

Select one:

a. $6.0 million and $10.0 million
b. $6.0 million and $8.8 million
c. $4.8 million and $7.3 million
d. $4.4 million and $6.4 million

Reference no: EM132659890

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