Jarrett Corp

question 12

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' 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 residual income in 2013?

• A) $24,552
• B) $18,763
• C) $5,789
• D) $5,200

---

Definitions:

Labor

Work performed by humans that is used in the production of goods and services.

Equivalent Unit

A metric in cost accounting that quantifies the effort invested in partially finished units by equating it to the output of completely finished units.

First-in

implies the method where the earliest goods produced or acquired are the first to be used or sold.

Materials

Inputs and supplies used in the production of goods or in the provision of services.