Question 8 Not answered Marked out of 1 p Flag question A company has a book value of $10.1 per share. The Market Value Added over the next 10 years is expected to be $2.2 per share, giving it a terminal book value of $12.3. The cost of equity is 8%, giving a present value of the MVA of $1.02. The expected market price of the share at the end of the tenth year is expected to be 1.7 times the book value. What is the value of the share using a multi-stage RIM? Note: This looks like a complicated question, but don't panic. Think about it. The value of the share is the book value at the start plus the present value of the Market Valued Added in Stage 1, plus the present value of the terminal value, which is the present value of Stage 2. In this case the terminal value is based on a premium comprised of the excess of market value over book value at the beginning of Stage 2. You have been given the PV of the MVA ($1.02). So you just need to calculate the terminal value, discount to a present value, and add it to the BV at the start and the PV of the MVA. Select one: a. $15.11 b. $13.91 c. $14.61 d. $16.81 The correct answer is: $15.11