Answer: company's book value plus the present value of its expected economic profits.

## Explanation In a single-stage residual income model, the value of a company is calculated as: **Value = Book Value + Present Value of Expected Residual Income** Where: - **Book Value** represents the current accounting value of equity - **Residual Income** (also called economic profit) = Net Income - (Cost of Equity × Book Value) This approach values a company based on its current book value plus the present value of future economic profits above the required return on equity. **Option A** is incorrect because replacement cost relates to asset-based valuation, not residual income. **Option B** is incorrect because it describes the dividend discount model, not the residual income model. **Option C** is correct as it accurately describes the single-stage residual income model formula.

Author: LeetQuiz Editorial Team