You Are Given the Following Information for Young Company Dividends for Year 6 and Beyond Are Expected to Remain

You are given the following information for Young Company. As of year 1, the company's book value is $80,000 and its cost of capital is 15%. $\begin{array}{|l|r|r|r|r|r|}\hline & \text { Year 1 } & \text { Year 2 } & {\text { Year 3 }} & {\text { Year 4 }} & {\text { Year 5 }} \\\hline \text { Sales } & \$ 150,000 & \$ 163,000 & \$ 171,000 & \$ 177,000 & \$ 188,000 \\\hline \text { Operating Expenses } & (\$ 115,000) & (\$ 123,500) & (\$ 131,000) & (\$ 135,300) & (\$ 146,735) \\\hline \text { Depreciation } & (\$ 12,000) & (\$ 13,100) & (\$ 14,300) & (\$ 14,900) & (\$ 15,300) \\\hline \text { Net Income } & \$ 23,000 & \$ 26,400 & \$ 25,700 & \$ 26,800 & \$ 25,965 \\\hline\\\hline \text { Dividends } & \$ 6,500 & \$ 5,500 & \$ 5,800 & \$ 8,200 & \$ 6,504 \\\hline\\\hline \text { Expected Book Value } & \$ 80,000 & \$ 96,500 & \$ 114,300 & \$ 147,300 & \$ 173,100 \\\hline\\\hline \text { Expected ROCE } & 28.75 \% & 26.34 \% & 24.57 \% & 22.89 \% & 22.00 \% \\\hline\end{array}$
Dividends for year 6 and beyond are expected to remain at year 5 level. a. Calculate Young's abnormal earnings for each of the years 1 to 5 .
b. Use an accounting based valuation model to estimate the value of Young's equity on January $1 ^ { \text {st } }$ of year 2, year 3 , year 4 and year 5 .
c. Use the PB formula to determine the PB ratio on January $1 ^ { \text {st } }$ of year 2 , year 3 , year 4 and year 5 .
d. Use the PE formula to determine the PE ratio on January $1 ^ { \text {st } }$ of year 2 , year 3 , year 4 and year 5 .