Question

biosci, inc., a biotech firm, has forecast the following growth rates for the next three years: 30 percent, 25 percent, and 20 percent. the company then expects to grow at a constant rate of 7 percent for the next several years. the company paid a dividend of $2.00 last week. if the required rate of return is 16 percent, what is the market value of this stock? (do not round intermediate calculations.

Answer 1

4.2 is the market value of this stock growth rates for the next three years.

What is a stock?

All of the shares used to split ownership of a corporation or company constitute stock in the financial world. A single share of stock represents a fractional ownership interest in the company based on the total number of shares.

Stocks signify ownership in a corporation that is publicly traded. You take a stake in a firm when you purchase its shares. If a corporation has 100,000 shares, for instance, and you purchase 1,000 of them, you will own 1% of the business.

Companies can raise money by selling investors shares of stock, or equity, on the stock market. Shareholders who own stocks receive voting privileges as well as a residual claim on corporate profits in the form of dividends and capital gains.

D1 = 21.3 = 2.6; D2=D11.25 = 3.25; D3=D21.2 = 3.9; D4=D31.07 = 4.173

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