National Co. provides consultancy services to various corporate clients in luzon. The growth rate is 5% for Year +1 to Year +5. The firm has provided the following forecasts of com prehensive income for Year +1 to Year +5: Year+1 763,503.00 841,762.06 Year +2 Year +3 883,850.16 928,043.67 974,445.80 Year +4 Year +5 Total common shareh olders' equity was P3,582,836 on January 1, Year +1. The firm does not expect to pay a dividend during the period of Year +1 to Year +5. The cost ofequity capital is 12%. The number of shares outstanding is 1,000,000. The firm expects comprehensive income to grow 3% annually after Year +5. The firm will pay its first dividend in Year +6. Use 5 decimal places for the factors.

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
Section: Chapter Questions
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1. Compute the total present value of residual income for the Year +1 to Year +5, using the residual income valuation model.

2. Compute the total present value of residual income on January 1, Year +1

3. Compute the present value of equity at on January 1, Year +1 before the midyear discounting adjustment using the residual income valuation model

National Co. provides consultancy services to various corporate clients in luzon.
The growth rate is 5% for Year +1 to Year +5. The firm has provided the follo win g forecasts of
com prehensive income for Year +1 to Year+5:
Year +1
763,503.00
Year +2
841,762.06
883,850.16
928,043.67
974,445.80
Year +3
Year+4
Year +5
Total common shareholders' equity was P3,582,836 on January 1, Year +1. The firm does not
expect to pay a dividend during the period of Year +1 to Year +5. The cost ofequity capital is 12%.
The number of shares outstanding is 1,000,000.
The firm expects comprehensive income to grow 3% annually after Year +5. The firm will pay its first
dividend in Year +6.
Use 5 decimal places for the factors.
Transcribed Image Text:National Co. provides consultancy services to various corporate clients in luzon. The growth rate is 5% for Year +1 to Year +5. The firm has provided the follo win g forecasts of com prehensive income for Year +1 to Year+5: Year +1 763,503.00 Year +2 841,762.06 883,850.16 928,043.67 974,445.80 Year +3 Year+4 Year +5 Total common shareholders' equity was P3,582,836 on January 1, Year +1. The firm does not expect to pay a dividend during the period of Year +1 to Year +5. The cost ofequity capital is 12%. The number of shares outstanding is 1,000,000. The firm expects comprehensive income to grow 3% annually after Year +5. The firm will pay its first dividend in Year +6. Use 5 decimal places for the factors.
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