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

question 18

Multiple Choice

Jarrett Corp.
At the end of 2010 Jarrett Corp.developed the following forecasts of net income:
$\begin{array}{lccc}& \text {Forecasted } \\ \text { Year: }& \text { Net Income} \\2011&\$20, 856\\2012&\$22,733\\2013&\$24,552\\2014&\$27,252\\2015&\$ 29.978\\\end{array}$

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%.
-At the beginning of 2012 investors had invested $25,000 of common equity in Grant Corp.and expect to earn a return of 11% per year.In addition,investors expect Grant Corp.to pay out 100% of income in dividends each year.Forecasts of Grant's net income are as follows:
2012 - $3,500
2013 - $3,200
2014 - $2,900
2015 and beyond - $2,750
Using this information,what is Grant's residual income valuation at the beginning of 2012?

• A) $25,000
• B) $26,350
• C) $26,151
• D) $26,041

---

Definitions:

Diverse Pool

A group or selection of candidates from various backgrounds, experiences, and perspectives, typically utilized in recruitment to enhance workplace diversity.

Greater Flexibility

The ability of an organization or individual to adapt to changes, innovate, and customize responses to meet varying needs.

Selection Choices

The range of methods and tools employers use to choose the most suitable candidates for positions from a group of applicants.

Qualified Applicants

Individuals who meet all the necessary criteria and possess the required skills and qualifications for a particular job opening.