In the Equity section the answer to the Residual Income question is zero. However this takes Book Value of the current year and not the previous year. Is this correct? RT formula: RI(t) = (ROE-r)B(t-1) What CFAI answer says: RI(t) = (ROE-r)B(t) From feedback: Residual Income = Net Income – (cost of equity capital x equity capital) = 975 – (0.12 x 8,125) 8,125
i wish i could confirm im positive it was previous years BV, otherwise i would have not used it and used clean surplus to derive the previous years BV
beginning BV = is last yr