At the beginning of 2012 investors had invested $125,000 of common equity in Jan Corpand expect to earn a return of 15% per year. In addition, investors expect Jan Corp to pay out 100% of income in dividends each year. Forecasts of Jan's net income are as follows: 2012 - $41,000 2013 - $35,400 2014 - $33,200 2015 and beyond - $25,000 Using this information what is Jan's residual income valuation
at the beginning of 2012?
a. $125,000
b. $184,600
c. $190,262
d. $260,415
C
Value(2012) = $125,000 BV(2012)
$19,348 Residual Income-2012
$12,590 Residual Income-2013
$9,501 Residual Income-2014
$23,823 Residual Income-2015 & beyond
TOTAL $190,262
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