Jones Corp

question 2

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' residual income in 2008?

• A) $24,552
• B) $18,763
• C) $5,789
• D) $5,200

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Definitions:

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