Module 32.4 LOS 32.h: Residual Income Forecasting with a Persistence Factor
The challenge of using residual income models is that we must forecast residual income indefinitely into the future. However, by …
residual income
Module 32.2 LOS 32.c: Residual Income Forecasting
We can use the following equation to forecast the residual income: RIt = Et − (r × Bt − 1) = (ROE …
Module 32.2 LOS 32.d: Fundamental determinants of Residual Income
Using a single-stage residual income model, we can highlight the fundamental drivers of residual income. We can equate B0 to …
Module 20.3 LOS 20.i: Economic profit, residual income, and claims valuation models
Economic profit is a measure of profit in excess of the dollar cost of capital invested in a project: EP = …