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 18 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
Excellent

Laurenleakan

  • Member
  • Posts: 309
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Limit intake of red meat and dairy products made with whole milk. Choose skim milk, low-fat or fat-free dairy products. Limit fried food. Use healthy oils when cooking.

Did you know?

There are more bacteria in your mouth than there are people in the world.

Did you know?

Urine turns bright yellow if larger than normal amounts of certain substances are consumed; one of these substances is asparagus.

Did you know?

An identified risk factor for osteoporosis is the intake of excessive amounts of vitamin A. Dietary intake of approximately double the recommended daily amount of vitamin A, by women, has been shown to reduce bone mineral density and increase the chances for hip fractures compared with women who consumed the recommended daily amount (or less) of vitamin A.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Technology Technology
Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo
Deconvolution fluorescence microscopy yields high-resolution optical sections th Deconvolution fluorescence microscopy yields high-resolution optical sections th
a) Appropriate chair height b) Chair is too low c) Chair is too high a) Appropriate chair height b) Chair is too low c) Chair is too high
High net primary productivity High net primary productivity
Video: What Are Carbohydrates? Importance of Carbs & High Carb Food

For a complete list of videos, visit our video library