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An investment advisor forecasts annual year-end dividends for Safe Energy Corp. (SEC) stock as shown below. If the stock if forecasted to be selling...

This question was answered on Apr 22, 2010. View the Answer
An investment advisor forecasts annual year-end dividends for Safe Energy Corp. (SEC) stock as shown below. If the stock if forecasted to be selling for $50.00 by rhe end of 2014, what would the stock price need to be at the start of 2010 to earn an overall 10% annual return over the 5 years. State any assumptions you need to make.
Year 2010 2011 2012 2013 2014
Dividends $1 $3 $4 $4 $3

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Dear Student, Please check the attached solutions of... View the full answer

CH230410_479664_FIN.doc

Y
ear
2010
2011
2012
2013
2014
R
ate
Price C
ash Flows
$
1.00
$
3.00
$
4.00
$
4.00
$
50.00
10%
$
40.17 Thus, the stock price need to be at the start of 2010 to
earn an overall 10% annual return...

This question was asked on Apr 22, 2010 and answered on Apr 22, 2010.

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