Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. growing, inc. is a firm that is experiencing rapid

Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend...

Free

90.2K

Verified Solution

Question

Finance

Growing, Inc. is a firm that is experiencing rapid growth. Thefirm yesterday paid a dividend of $7.10. You believe that dividendswill grow at a rate of 16.0% per year for two years, and then at arate of 10.0% per year thereafter. You expect the stock will sellfor $40.42 in two years. You expect an annual rate of return of23.0% on this investment. If you plan to hold the stockindefinitely, what is the most you would pay for the stock now?

Answer & Explanation Solved by verified expert
4.3 Ratings (686 Votes)

Most you wpuld pay now                     39.73
Statemnet showing Current Price
Particulars Time PVf 23% Amount PV
Cash inflows (Dividend)                          1.00                   0.8130                   8.2360                        6.70
Cash inflows (Dividend)                          2.00                   0.6610                   9.5538                        6.31
Cash inflows (Price)                        2.00                   0.6610                     40.42                     26.72
Current Price of Stock                     39.73

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Growing, Inc. is a firm that is experiencing rapid growth. Thefirm yesterday paid a dividend of $7.10. You believe that dividendswill grow at a rate of 16.0% per year for two years, and then at arate of 10.0% per year thereafter. You expect the stock will sellfor $40.42 in two years. You expect an annual rate of return of23.0% on this investment. If you plan to hold the stockindefinitely, what is the most you would pay for the stock now?

Other questions asked by students

Q

How many configurational isomers are possible for the following compounds? A. 4-chloro-3-hexen-2-ol B. 2,4-hexadiene C. 3-chloro-1,4-pentadiene

Chemistry
Q

Why we need to use elastic limit state?

Civil Engineering
Q

A small mailbag is released from a helicopter that is descending steadily at 1.69 m/s. (a) After...

Physics
Q

The vector position of a 3 40 g particle moving in the xy plane varies...

Physics
Q

Explain why the triangles are similar Then find the missing length x Part 2 of...

Basic Math
Q

Use the method of cylindrical shells to find the volume V of the solid obtained...

Calculus
Q

Fresh Air Sdn Bhd manufactures vanilla bouquet air freshener through two...

Accounting
Q

Weightman Corporation's net operating income in Year 2 was $76,385, net income before taxes was...

Accounting
Q

Need help with 3-14 3-4 After years...

Accounting
Q

Ironwood Company manufactures a variety of sunglasses. Production information for its most popular line, the...

Accounting
Q

QUESTION 1

Accounting
Q

R. Wayne Computer Consultants, Corp. develops and installs integrated computer systems and networks for large...

Accounting