Hi guys, In this question, we need to use average ROE to get the current year normalized earnings. So i made the average of the last 6 years excluding this year’s ROE, then i multiplied it by the current year’s BVPS to get the answer B.
The answer (page 252) states that we need to multipy the average ROE by the 2015 BVPS, which is last year’s book value. In the Equity book 3, page 189 regarding normalized ROE, it states that we need to multiply by the current book value per share. I’m really confused. They say dont use 2016 earnings or ROE in the question, but they dont say “dont use 2016 BVPS”. Thanks.