Jones Corp

question 34

Multiple Choice

Jones Corp. Use this information to answer the following questions:
At the end of 2005 Jones Corp. developed the following forecasts of net income:
Management believes that after 2010 Jones will grow at a rate of 7% each year. Total common shareholders' was $112,768 on December 31, 2005. Jones has not established a dividend and does not plan on paying dividends during 2006 to 2010, its cost of equity capital is 12%.
Compute the value of Jones Corp. on January 1, 2006, using the residual income valuation model. Use the half-year adjustment.

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

---

Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate reflection of costs.

Direct Labor-Hours

Direct labor-hours are the total hours worked by employees directly involved in the manufacturing process.

Direct Materials Cost

The cost of raw materials used to produce a product, which are directly attributable to the product.

Direct Labor-Hours

The combined working hours of employees directly contributing to the manufacturing cycle.