What Is the Current Value of a Share of HiGro

question 61

Multiple Choice

What is the current value of a share of HiGro common stock that does not pay a current dividend? Earnings are growing at a 20 percent per year rate for the next 10 years.Assume the investor has a required rate of return of 15 percent and expects to sell the security in 5 years.Current earnings are $1.50 per share.

• A)$56.87
• B)$62.21
• C)$25.00
• D)There is insufficient information to solve this problem.

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