Power, Inc. is a distributor of electrical supplies and tools. Management for the company has developed the following forecasts of net income:
Red Ranger, CFO of Power, Inc. expects net income to grow at a rate of 9 percent per year after 2011 and the company's cost of equity capital is 15%. Management plans to payout all income in dividends and plans to continue this policy into the future. Power's common shareholders' equity at January 1, 2006 is $100,000.
Required:

Question

Power, Inc. is a distributor of electrical supplies and tools. Management for the company has developed the following forecasts of net income:
  Red Ranger, CFO of Power, Inc. expects net income to grow at a rate of 9 percent per year after 2011 and the company's cost of equity capital is 15%. Management plans to payout all income in dividends and plans to continue this policy into the future. Power's common shareholders' equity at January 1, 2006 is $100,000.
Required:

Quizplus · Accepted Answer

The Answer of Power, Inc. is a distributor of electrical supplies and tools. Management for the company has developed the following forecasts of net income:
  Red Ranger, CFO of Power, Inc. expects net income to grow at a rate of 9 percent per year after 2011 and the company's cost of equity capital is 15%. Management plans to payout all income in dividends and plans to continue this policy into the future. Power's common shareholders' equity at January 1, 2006 is $100,000.
Required: