Reading 43: Residual Income Valuation-LOS i 习题精选 2010, face, industry, company, present

土豆妮

Session 12: Equity Investments: Valuation Models
Reading 43: Residual Income Valuation

LOS i: Justify an estimate of continuing residual income at the forecast horizon, given company and industry prospects.

 

 

 

The present value of Forman Electronics’ projected residual income (RI) for the next five years is ￡80 per share. Beyond that time horizon a key analyst projects that the firm will sustain a RI of ￡17 per share, which is the RI for year 5. Given a cost of equity of 13%, what is the terminal value of the stock as of year 5?

A) ￡500.00.

B) ￡19.96.

C) ￡130.77.

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The stock’s terminal value as of year 5 is:

TV = 17.00 / 0.13 = 130.77

土豆妮

The present value of GB Industries’ projected residual income (RI) for the next five years is 70 per share. Beyond that time horizon, a key analyst projects that the firm will sustain a RI of 15 per share, which is the RI for year 5. Given a cost of equity of 12%, what is the terminal value of the stock as of year 5?

A) ￡500.00.

B) ￡125.00.

C) ￡560.00.

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The stock’s terminal value as of year 5 is:

TV = 15.00/0.12 = 125.00

土豆妮

The present value of Raver Industries’ projected residual income (RI) for the next five years is ￡60 per share. Beyond that time horizon, a key analyst projects that the firm will sustain a RI of ￡11 per share, which is the RI for year 5. Given a cost of equity of 12%, what is the terminal value of the stock as of year 5?

A) ￡91.67.

B) ￡500.00.

C) ￡560.00.

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The stock’s terminal value as of year 5 is:

TV = 11.00 / 0.12 = 91.67