Sophia is trying to value AALI.JK using residual income method. As of 21 Octo...
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Sophia is trying to value AALI.JK using residual income method. As of 21 October 2022, the share price for AALI.JK is IDR 8,750. Exhibit 1 shows Sophia’s projection.
Exhibit 1. Sophia’s
Before making the projection, Sophia has already calculated the cost of equity for AALI using the following variables :
Beta : 1.23
Risk-free rate : 4.75%
Equity Risk Premium : 6.12%
Sophia assumes that AALI’s will gradually decline to zero. Sophia wants to use persistence factor to value AALI’s for 2026 onwards. The persistence factor is 0.65. Calculate the present value of AALI’s from 2026 onwards!