Question
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
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. | $24,073,000 |
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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
