Why should I choose AnalystNotes?
AnalystNotes specializes in helping candidates pass. Period.
Basic Question 2 of 3
Consider the following information about a company:
- ROE: 15%. Growth rate: 10%. The company is expected maintain them forever.
- Book value per share: $50.00.
- Cost of equity: 12%.
Calculate the equity value using the single-stage residual income model.
User Contributed Comments 0
You need to log in first to add your comment.
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
explain fundamental determinants of residual income;
explain the relation between residual income valuation and the justified price-to-book ratio based on forecasted fundamentals;
calculate and interpret the intrinsic value of a common stock using single-stage (constant-growth) and multistage residual income models;
CFA® 2025 Level II Curriculum, Volume 4, Module 24.