Jones Corp

question 26

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%.
What would be Jones' common shareholders' equity at the end of 2009?

• A) $180,909
• B) $208,161
• C) $95,540
• D) $112,768

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Definitions:

Income Summary

An account used in the closing process that summarizes the revenues and expenses of an accounting period, to determine the net income or loss.

Ratio Based

A method or analysis that involves the comparison of two or more numbers to evaluate the performance, condition, or relationship of different financial aspects of a business.

Net Income

The net income of a business following the subtraction of all costs and taxes from its total revenue.

Capital Balances

This represents the amount of funds that shareholders have invested in a company, often reflected in the equity section of a balance sheet.