Jarrett Corp Management Believes That After 2015 Jarrett Will Grow at a Following

question 60

Multiple Choice

Jarrett Corp.
At the end of 2010 Jarrett Corp.developed the following forecasts of net income:
$\begin{array}{lccc}& \text {Forecasted } \\ \text { Year: }& \text { Net Income} \\2011&\$20, 856\\2012&\$22,733\\2013&\$24,552\\2014&\$27,252\\2015&\$ 29.978\\\end{array}$

Management believes that after 2015 Jarrett will grow at a rate of 7% each year.Total common shareholders' equity was $112,768 on December 31, 2010.Jarrett has not established a dividend and does not plan to paying dividends during 2011 to 2015.Its cost of equity capital is 12%.
-Assume that a firm's book value at the beginning of the year is $17,800 and that the firm reports net income of $6,200.If the firm's book value at the end of the year is $20,000 what was the amount of dividends paid during the year?

• A) $4,000
• B) $8,800
• C) $2,200
• D) Insufficient information to determine

---

Definitions:

Defective

Pertains to items or products that fail to meet the required standards or specifications.

Nondefective

Referring to items or products that meet the required quality standards and are free of defects.

Control Charts

Tools used in statistical process control to monitor the consistency of processes over time and identify variances.

Control Limits

Statistical boundaries in a control chart that determine the acceptability range for a process variability, outside of which signals a process is out of control.