Agarwal Technologies Was Founded 10 Years Ago A)$ 994
B)$10

question 7

Multiple Choice

Agarwal Technologies was founded 10 years ago.It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend.Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter.Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below.Assuming a required return of 11.00%, what is your estimate of the stock's current value?

$\begin{array}{llllllll}\text {year }&0&1&2&3&4&5&6\\\text { Growthrate } & \text { NA } & \text { NA } & \text { NA } & \text { NA } & 50.00 \% & 25.00 \% & 8.00 \% \\\text { Dividends } & \$ 0.000 & \$ 0.000 & \$ 0.000 & \$ 0.250 & \$ 0.375 & \$ 0.469 & \$ 0.506\end{array}$

• A)$ 9.94
• B)$10.19
• C)$10.45
• D)$10.72
• E)$10.99

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Definitions:

Lexical Method

A technique in personality psychology that involves identifying personality traits and dimensions by analyzing language and words people use to describe themselves and others.

Personality Domains

Broad categories or dimensions used to describe and understand the complex nature of human personality, such as the Big Five personality traits.

Neuroticism

A trait from the Big Five personality traits framework, pointing to an individual's tendency towards emotional instability and anxiety.

Honesty

The quality of being truthful, sincere, and free from deceit or fraud in conduct or speech.