You Are Evaluating the Purchase of Charbridge,Inc

question 12

Multiple Choice

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

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

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Definitions:

Value Judgments

Assessments based on personal values, beliefs, or priorities rather than objective criteria.

Decision Making

The cognitive process of selecting a course of action from multiple alternatives, often involving some form of judgement or deliberation.

Floating

The state of being buoyant or suspended within a medium, or a financial strategy involving the use of floating interest rates.

Information Flows

The movement or transmission of data and information within an organization from one point or person to another.