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A firm forecasts that its residual earnings in 2021 and 2022 will be 100m and 115m, respectively, and that every year after 2022 residual earnings
A firm forecasts that its residual earnings in 2021 and 2022 will be 100m and 115m, respectively, and that every year after 2022 residual earnings will grow at a constant rate of 6% per annum. If the firms cost of equity is 12% and the book value of equity in 2020 is 1,700m, the market value of the equity in the firm in 2020 is closest to:
A. 3,801m
B. 3,301m
C. 3,401m
D. 3,551m
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