CFAI Mock Afternoon #51 explained, valuation, question

meghanjackson

This question calculates the value per share of common stock using the residual income valuation model.
To get to this value, the mock exam answer explains a time-consuming calculation to get each year’s book value. After this is done, you would have to calculate each year’s RI and then utilize the RI value equation.
Is there a quicker way to get this? This problem as explained would require at least 5-10 minutes by itself.

segalm

I hate the RI questions, but remember doing this one the long way. I dont think there is another way around it.

invic

In some instances you can forecast without generating the entire table. However this one has changing ROE and you have no choice. You can do the calculations without clearing and starting over. Give it a try and that will save you some time and stress.
hey june2009. i think you helped me last year with level 1 by showing me the data sheet function. Thanks for that.