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Return on common equity,retained earnings,growth rates

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An analyst presents you with the following pro forma (in millions) that gives her forecast of earnings and dividends for 2007-2011. She ask you to value the 1,380 million shares outstanding at the end of 2006 when common shareholders equity stood at 4310 million use a required return for equity of 10 percent in calculating.

2007E 2008E 2009E 2010E 2011E
Earnings 388.00 570.0 599.0 629.0 660.4
Dividends 115.00 160.0 349.0 367.0 385.4

Please answer the following:
a. Forecast book value return on common equity (ROCE) and residual earnings for each of the years 2007-2011.
b. Forecast growth rates for book value and growth in residual earnings for each of the years 2008-2011.

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The answer contains the computation of return on common equity, growth rates and retained earnings. See Excel attachment for details.

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