Compounding is the process of leaving your money and any accumulated interest in an investment for more than one period, thereby reinvesting the interest.
<h3>What is compounding?</h3>
This can be explained to be a situation where the interest that is made from a sum of money is added into the principal sum of money and reinvested.
The initial principal amount and the interest made after a period when added together is regarded as compounding.
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Answer:
* The stock price in five years if the P/E ratio remained unchanged: $33.64
* The price be if the P/E ratio increased to 22 in five years: $37.77.
Explanation:
As the dividend has been growing at 7.25% each year in the next five years, earnings per share in the next five years should grow at the same rate, and earnings per share in year five will be: 1.21 x (1+7.25%)^5 = $1.717.
* The stock price in five years if the P/E ratio remained unchanged will be equal to:
Earning per share in the next five years x Current P/E ratio = 1.717 x 19.59 = $33.64
* The price be if the P/E ratio increased to 22 in five years will be equal to:
Earning per share in the next five years x New P/E ratio = 1.717 x 22 = $37.77.
The answer for this question is: Intangible resource
Intangible resource is a type of resource owned by a company that cannot be measured by number and do not have physical form.
Another example for an intangible resource is: employee's loyalty, Human Development within the company, employee's motivation, etc.