Residual Income Schweser Exam 2 1035, into, however, equity

koba

All in $ thousands
2008 2009
Actual Projection
Net Earnings 1035 8645
At the beg of 2008 equity is $73M and cost of equity cap is 8%. What’s 2008 RI?
Right so my understnading of this is Et - (Bt-1 x ke) however they use 2008 earnings and not 2009 estimates. Isn’t the earnings input into RI supposed to be projected earnings?
This is Exam 2 AM Q19.
Thanks

dmrktrading

The question asked for 2008 RI, not projected 2009 RI.
Therefore, you use 2008 NI less the equity charge.