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

question 29

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? $$\begin{array} { l r r r r r r r } \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline \text { Growth rate } & \text { NA } & \text { NA } & \text { NA } & \text { NA } & 50.00 \% & 25.00 \% & 8.00 \% \\\text { Dividends } & \$ 0.000 & \$ 0.000 & \$ 0.000 & \$ 0.250 & \$ 0.375 & \$ 0.469 & \$ 0.506\end{array}$$

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

---

Definitions:

Fetal Development

Refers to the stages of growth and development of a fetus from the embryonic stage until birth, encompassing various physiological and anatomical changes.

Last Trimester

Refers to the final third of a pregnancy, typically encompassing weeks 27 through 40, when significant fetal growth and organ maturation occur.

Developing Fetus

Refers to the developing human from roughly the ninth week of pregnancy until birth, undergoing significant growth and development.

Ill Effects

Negative consequences or harmful results, typically from an action or condition.