Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Islander Inc. is a new firm in a rapidly growing industry.
The company would be paying $2.50 in dividend next
year. After that the company intends to grow the
dividend at a 8% rate annually over a long period. You
plan to buy the stock now and expect to sell it for
$48.23 three years from now. What price must you pay
now if your required rate of return is 10%?
$42.93
O $125.00
O $35.71
O $40.62
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