This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: One of the arguments that analysts use to justify the high stock valuations for technology firms is ... (Read 66 times)

mspears3

  • Hero Member
  • *****
  • Posts: 586
on: Apr 25, 2021
One of the arguments that analysts use to justify the high stock valuations for technology firms is that they are very risky during their start-up years but become less risky as the technology becomes widely adopted. Consider trying to value a company called TechCorp on Jan 1. It pays dividends annually at midnight on Dec 31. The last dividend (yesterday) was $1. Dividends were expected to grow for two years at 10% and then settle down to a long-run growth rate of 5% in perpetuity. Because of the initial riskiness of the company, investors required a 20% rate of return over the first two years, but only a 12% rate of return thereafter. The time line of dividends is as follows. What is a fair price for TechCorp on Jan 1?

◦ $8.70
◦ $12.60
◦ $13.44
◦ $13.52
◦ $14.53
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by mspears3 on Apr 25, 2021

skipfourms123

  • Sr. Member
  • ****
  • Posts: 343
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 59% of students answer this correctly


mspears3

  • Member
  • Posts: 586
Reply 2 on: Apr 25, 2021
Wow, this really help

komodo7

  • Member
  • Posts: 322
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Coca-Cola originally used coca leaves and caffeine from the African kola nut. It was advertised as a therapeutic agent and "pickerupper." Eventually, its formulation was changed, and the coca leaves were removed because of the effects of regulation on cocaine-related products.

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

Addicts to opiates often avoid treatment because they are afraid of withdrawal. Though unpleasant, with proper management, withdrawal is rarely fatal and passes relatively quickly.

Did you know?

When intravenous medications are involved in adverse drug events, their harmful effects may occur more rapidly, and be more severe than errors with oral medications. This is due to the direct administration into the bloodstream.

Did you know?

Vampire bats have a natural anticoagulant in their saliva that permits continuous bleeding after they painlessly open a wound with their incisors. This capillary blood does not cause any significant blood loss to their victims.

(a) With few ticks, moose retain a brown coat; (b) at high numbers of ticks, moose self-groom, destr (a) With few ticks, moose retain a brown coat; (b) at high numbers of ticks, moose self-groom, destr
The High Plains Aquifer The High Plains Aquifer
The developing and emerging nations have high rates of population growth The developing and emerging nations have high rates of population growth
Technology In Action Complete Technology In Action Complete
Which of the 3 structures shown below has the shortest bond length? Justify your answer. Which of the 3 structures shown below has the shortest bond length? Justify your answer.
Video: Natural Selection, Species Isolation and Real World Example

For a complete list of videos, visit our video library