Asked by kenny

The price of consolidated everything is now $75. The company pays no dividends. Ms. Bossard expects the price 3 years from now to be $100 per share. should Ms. Bossard buy Consolidated e. if she desires a 10% rate of return?explain
Answered by Ms. Sue
We'll be glad to check your figures on this problem.
Answered by kenny
i don't even know where to start on this problem
Answered by Ms. Sue
Take 10% of $75. Add it to $75. Is it more or less than $100?
Answered by kenny
its less, 82.50
Answered by Ms. Sue
So -- this must be a reasonable investment since he expects the price of the stock to be more than $82.50.
Answered by economyst
Ah, but remember, the expected $100 is 3 years hence. Is $75 compounded over 3 years at 10% greater than 100?
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