The price of Garden Designs, Inc. is now $ 85. The company pays no dividends. Sean Perth expects the price four years from now to be $ 125 a share. Should Sean buy Garden Designs if he wants a 15 percent rate of return? Explain.

Answer 1

Yes.

End of year 1 >> 85 * 1.15 = 97.75
Year 2 >> 91.74 * 1.15 = 112.41

Complete this chart.