9. $112,768 $185,329 $195,540 $133,624 Compute the value of Jarrett Corp. on January 1, 2011, using the residual income valuation model. Use the half-year adjustment.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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At the end of 2010 Jarrett Corp. developed the following forecasts of net income:
Year
2011
Forecasted
Net Income
$20,856
2012 $22,733
2013 $24,552
2014 $27,252
2015 $29,978
Management believes that after 2015 Jarrett will grow at a rate of 7% each year. Total common shareholders' was $112,768 on December 31, 2010. Jarrett has not
established a dividend and does not plan to paying dividends during 2011 to 2015. Its cost of equity capital is 12%.
9.
Compute value of Jarrett Corp. on January 1, 2011, using the residual income valuation model. Use the half-year adjustment.
$112,768
$185,329
$195,540
$133,624
Transcribed Image Text:At the end of 2010 Jarrett Corp. developed the following forecasts of net income: Year 2011 Forecasted Net Income $20,856 2012 $22,733 2013 $24,552 2014 $27,252 2015 $29,978 Management believes that after 2015 Jarrett will grow at a rate of 7% each year. Total common shareholders' was $112,768 on December 31, 2010. Jarrett has not established a dividend and does not plan to paying dividends during 2011 to 2015. Its cost of equity capital is 12%. 9. Compute value of Jarrett Corp. on January 1, 2011, using the residual income valuation model. Use the half-year adjustment. $112,768 $185,329 $195,540 $133,624
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