Jarrett Corp. At the End of 2010 Jarrett Corp. Developed the Following

question 19

Multiple Choice

Jarrett Corp.
At the end of 2010 Jarrett Corp. developed the following forecasts of net income:

Management believes that after 2015 Jarrett will grow at a rate of 7% each year. Total common shareholders' equity 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%.
Compute the value of Jarrett Corp . on January 1, 2011, using the residual income valuation model. Use the half-year adjustment.

• A) $112,768
• B) $185,329
• C) $195,540
• D) $133,624

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