You Are Evaluating the Purchase of Charbridge, Inc

question 46

Multiple Choice

You are evaluating the purchase of Charbridge, Inc. common stock which currently pays no dividend and is not expected to do so for many years. Because of rapidly growing sales and profits, you believe the stock will be worth $51.50 in 3 years. If your required rate of return is 16%, what is the stock worth today?

• A) $59.74
• B) $51.25
• C) $32.99
• D) $0.00 because stocks that do not pay dividends have no value.

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