Intrinsic Value Calculation Using Residual Income Model

A financial analyst is evaluating a publicly traded company, XYZ Corp., to determine its intrinsic value using the Residual Income Model (RIM). The analyst has gathered the following information:

• Current equity book value per share: $50
• Expected return on equity (ROE): 12%
• Cost of equity: 10%
• Forecasted residual income for next year: $4 million

Based on this information, which of the following statements about the intrinsic value of XYZ Corp. is correct?