-Net Income Is Expected to Increase by 10% for the 2005

question 16

Multiple Choice

$$\begin{array}{l}\text { Rivaz Corporation }\\\begin{array} { l r } & 2005 \\\text { Net Income } & \$ 3,000 \\\text { Dividends } & \$ 1,000 \\\text { Total Assets } - 12 / 31 / 05 & \$ 35,000 \\\text { Total Liabilities } - 12 / 31 / 05 & \$ 21,225 \\\text { Number of shares outstanding } & 1,000 \\\text { Cost of Equity } & 12 \%\end{array}\end{array}$$
-Net income is expected to increase by 10% for the next year, and dividend payout ratio is expected to remain constant. After 2006, retained earnings are expected to decrease to zero. Using the residual income method what is the value per share of Rivaz stock as of 12/31/05?

• A)$15.25
• B)$15.16
• C)$14.38
• D)$13.77

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Definitions:

Ethnographic Research

A qualitative research method focused on studying cultures and communities through direct observation and participation.

Operationalize Constructs

The process of defining theoretical concepts in practical, measurable terms.

Direct Observation

A research method where data is collected by watching subjects in their natural environment without interaction.

Asynchronous

Occurring at different times or uncoordinated—for example, members of a social media site contributing individually to it, in their own time. See also synchronous.