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Residual Income Valuation Presented below are data for Boso Audio: Forecast Year 1 2 3 4 5 Terminal No. of outstanding shares 500 500 500
Residual Income Valuation Presented below are data for Boso Audio:
Forecast Year | ||||||
---|---|---|---|---|---|---|
1 | 2 | 3 | 4 | 5 | Terminal | |
No. of outstanding shares | 500 | 500 | 500 | 500 | 500 | 500 |
Terminal year growth rate | 5% | |||||
Cost of common equity | 10% | 10% | 10% | 10% | 10% | 10% |
Net income | $79 | $94 | $111 | $130 | $150 | $157 |
Beginning of year common equity | $649 | $683 | $720 | $758 | $797 | $839 |
Free cash flow to common equity | $44 | $58 | $73 | $90 | $108 | $115 |
Compute the value of a share of Boso common stock using the residual income method.
Do not round your computations until your final answer. Round final answer to two decimal places.
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