Based on the Information Provided, Calculate the Intrinsic Value in 2010

question 136

Multiple Choice

Based on the information provided, calculate the intrinsic value in 2010 of a share of INV Corp. using the Present Value of Earnings Model (infinite holding period) . For 2010 net income was $250,000, total debt was $50,000, and there were 206,263 shares outstanding. The required rate of return is 12 percent, and the estimated growth rate in earnings is 5.5 percent.

• A) $19.43
• B) $23.98
• C) $28.52
• D) $22.73
• E) $15.50