Show Numerically That the Investment Horizon Has No Bearing on Current

question 67

Essay

Show numerically that the investment horizon has no bearing on current stock price. For your illustration assume investment horizons of 2 versus 3 years and the following facts: The stock has a required return of 17%, a growth rate of 7%, and has just paid a $3.74 dividend.

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Definitions:

Statement of Earnings

A financial document that provides an account of a company's revenue, expenses, and profit over a specific period, also known as an income statement.

FVTPL

Fair Value Through Profit or Loss, a classification under IFRS for financial instruments measured at their fair value with changes recognized in the profit or loss.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity without controlling it.

Investment Account

An account held at a financial institution that contains securities, cash, and other assets that an individual or entity invests in.