Question

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

Answer 1

The price should you be willing to pay for this stock is $24.86

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.

Solution:

The price that will be paid for this stock can be calculated as follows:

50= x (15/100^5)

50= x (0.15+1^5)

50= x (1.15^5)

50= 2.0113x

Divide both sides by the coefficient of x

= 50/2.0113

= 24.86

Thus, the price that will be paid for the stock is $24.86

To learn more about the sum, refer

brainly.com/question/24244811

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