Mendosa Case - Question about residual income calculation
Hi guys, I have a question with Mendosa case - Question 6.
The answer said “residual income in year 5 = 5.4*1.155”.
I don’t understand why we need to multiply 1.155, rather than 1.154?
The residual income in Year 1 = Book value of equity in year 0 * (ROE - r)
Please give me some hints.
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