Question: Using the following variables, develop quarterly formulas equivalent to Formulas 16.2.1 and 16.2.2: DistrEarn_tot(cyq) = Future distributable earnings in calendar quarter and year cyq, for

Using the following variables, develop quarterly formulas equivalent to Formulas 16.2.1 and 16.2.2:

DistrEarn_tot(cyq) = Future distributable earnings in calendar quarter and year cyq, for the business being analyzed iQ = Quarterly hurdle rate at which future distributable earnings will be discounted.

See (1 1) le EmbeddedValue(byq) = Embedded value as of byq (the year and end of quarter at which the model begins), using a hurdle rate of iQ ROIQ = The simple, quarterly return on investment, to be solved for. The simple, annual ROI is related to ROIQ as follows:

ROI = (1 + ROIQ)* — 1.

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