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

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Definitions:

Everyday World

The realm of daily life where individuals engage in routine activities and interactions.

Durkheim

Emile Durkheim, a foundational French sociologist, is known for his works on social solidarity, collective conscience, and the role of social integration in maintaining societal order.

Profane

That which is ordinary or not sacred, often referring to everyday objects and concerns outside the realm of the religious or holy.

William James

An American philosopher and psychologist who is considered one of the leading figures in the early development of the American school of pragmatism.