Question
15) Residual Income Valuation - Grand Central Video's accountant forecasts the following Net Income for the next two years: Year 2021 $2,420,000 2022 $2,600,000 She
15) Residual Income Valuation - Grand Central Video's accountant forecasts the following Net Income for the next two years:
Year
2021 $2,420,000
2022 $2,600,000
She estimates that Grand Central's Re = 12%, and its growth rate g=8%. The company does not give a dividend . If its book value is $15,000,000, what valuation does the accountant place on the company?
Please choose the answer closest to your calcualtion.
| A. | $34,287,000 | |||||||||||||
| B. | $9,082,000 | |||||||||||||
| C. | $21,217,000 | |||||||||||||
| D. | $24,073,00 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
