Intrinsic Value Calculation using Residual Income

Medium Equity Valuation Applications Residual Income Valuation

DEF Holdings has reported the following financial results for the last fiscal year:

- Net income: $2,400,000

- Book value of equity at the beginning of the year: $10,000,000

- Required rate of return on equity: 10%

Using the Residual Income Valuation method, what is the estimated intrinsic value of DEF Holdings' equity at the end of the current year?

Intrinsic value is $12,000,000.

Intrinsic value is $10,600,000.

Intrinsic value is $11,600,000.

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Correct4.3K

% Correct68%