You have the following information for Research Lab, Inc. 19 Use the information on the left-hand screen, fill in missing value in the following blank cells: • The stock is currently trading at $8.75 • Expected ROE = 16% annually for each of the next four years • Current book value of equity =$435, 000, 000 • Shares outstanding: 60 million • Required rate of return on equity = 12% • No dividends paid and all earnings are reinvested • Continuing residual income = 0 after four years 1. The Year 4 residual income is $ (Keep your answer to 2 decimal places) 2. Based on the residual income model, the intrinsic value of Research Lab, Inc., is $ (Keep your answer to 2 decimal places)

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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You have the following information for Research Lab, Inc.:
19 Use the information on the left-hand screen, fill in the missing value in the following blank cells:
• The stock is currently trading at $8.75
Expected ROE = 16% annually for each of the next four years
Current book value of equity =$435, 000, 000
Shares outstanding: 60 million
Required rate of return on equity = 12%
No dividends paid and all earnings are reinvested
Continuing residual income = 0 after four years
1. The Year 4 residual income is $
(Keep your answer to 2 decimal places)
2. Based on the residual income model, the intrinsic value of Research Lab, Inc., is $
(Keep your
answer to 2 decimal places)
Transcribed Image Text:You have the following information for Research Lab, Inc.: 19 Use the information on the left-hand screen, fill in the missing value in the following blank cells: • The stock is currently trading at $8.75 Expected ROE = 16% annually for each of the next four years Current book value of equity =$435, 000, 000 Shares outstanding: 60 million Required rate of return on equity = 12% No dividends paid and all earnings are reinvested Continuing residual income = 0 after four years 1. The Year 4 residual income is $ (Keep your answer to 2 decimal places) 2. Based on the residual income model, the intrinsic value of Research Lab, Inc., is $ (Keep your answer to 2 decimal places)
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