Schweser notes (Equity Investments) - Question 15 of Residial Income valuation. In calculating the PV of continuing residual income, they leave out residual income R(t) which is 6.25 for 2010. I think this is an error. the formula is (Pt -Bt) + Rt/1+r , but they just discount (Pt - Bt) to get the PV of continuing residual income. Any one can take a shot at this?
I am not able to locate the question… question 15 in my Schweser 2011 book in the residual income one is a subjective one, no numbers…
this question was from schweser 2010. I think they have removed it from the 2011 version. however i can email you the question if you want.