Zephyr Inc

question 63

Multiple Choice

Zephyr Inc. sells wind based systems for generating electricity. The company pays no dividends, but you estimate the stock will be worth $50 per share 5 years from now and you require a 15% rate of return for stock investments of this type. What price should you be willing to pay for this stock?

• A) $12.50
• B) $24.86
• C) $43.48
• D) $57.50

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Definitions:

Linear Model

A statistical method that describes the relationship between two or more variables using a straight line.

Regression

A statistical method used to understand the relationship between a dependent variable and one or more independent variables.

Kilowatt-Hours

A unit of energy measurement equal to the power consumption of one thousand watts for one hour.

Square Feet

A unit of area measurement in the Imperial and US customary systems, used to measure the size of an area.