Jarrett Corp Management Believes That After 2015 Jarrett Will Grow at a Developed

question 28

Multiple Choice

Jarrett Corp.
At the end of 2010 Jarrett Corp. developed the following forecasts of net income:
$\begin{array}{c}\begin{array}{l}\\\text { Year } \\2011 \\2012 \\2013 \\2014 \\2015 \end{array}\begin{array}{l}\text { Forecasted}\\\text { Net Income}\\\$ 20,856 \\\$ 22,733 \\\$ 24,552 \\\$ 27,252 \\\$ 29,978 \end{array}\end{array}$

Management believes that after 2015 Jarrett will grow at a rate of 7% each year. Total common shareholders' was $112,768 on December 31, 2010. Jarrett has not established a dividend and does not plan to paying dividends during 2011 to 2015. Its cost of equity capital is 12%.
-
What would be Jarrett's common shareholders' equity at the end of 2014?

• A) $180,909
• B) $208,161
• C) $95,540
• D) $112,768

---

Definitions:

Product Prices

The amount of money required to purchase a good or service, often influenced by factors such as production costs, competition, and demand.

Narrow Range

A situation where variations or differences within data points, options, or outcomes are minimal or significantly limited.

Blue Ocean Strategy

A business strategy that focuses on creating new market spaces (blue oceans) where there is no competition, as opposed to competing in existing industries (red oceans).

Competitive Advantage

A situation or factor that places a company in an advantageous or dominant position over its rivals in the business.