Jarrett Corp.

At the end of Year $0$ Jarrett Corp. developed the following forecasts of net income:

YearForecasted

Net IncomeYear $1$$$20,856$Year $2$$$22,733$Year $3$$$24,552$Year $4$$$27,252$Year $5$$$29,978$

Management believes that after Year $5$ Jarrett will grow at a rate of $7\%$ each year. Total common shareholders' equity was $$110,000$ on December $31,$ Year $0.$ Jarrett has not established a dividend and does not plan to paying dividends during Year $1$ to Year $5.$ Its cost of equity capital is $12\%.$

Compute the value of Jarrett Corp. on January $1,$ Year $1,$ using the residual income valuation model. Use the half$-$year adjustment.

a$.$ $$172,071$

b$.$ $$182,395$

c$.$ $$149,713$

d$.$ $$140,300$