Question #6

Reading: Reading 23 Residual Income Valuation

PDF File: Reading 23 Residual Income Valuation.pdf

Page: 4

Status: Unattempted

Correct Answer: A

Part of Context Group: Q6-8 First in Group
Shared Context
- Calculate Retty's residual income for 20x6. A) –$0.3 million. B) $0.7 million. C) $2.5 million.
Question
Calculate Retty's Market Value Added (MV
Answer Choices:
A. $9.3 million
B. $12.5 million
C. $50.5 million
Explanation
Market value added = market value of (total) capital – book value of capital = (145 + 16) – (94.5 + 16) = $50.5m
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