Blossom Infotech is a fast-growing communications company. The company did not pay a dividend last year and is not expected to do so for the next two years. Last year the company’s growth accelerated, and management expects to grow the business at a rate of 40 percent for the next five years before growth slows to a more stable rate of 7 percent. In the third year, management has forecasted a dividend payment of $1.40. Dividends will grow with the company thereafter. (a1) Your answer is correct. Calculate the value of the company’s stock at the end of its rapid growth period (i.e., at the end of five years). The required rate of return for such stocks is 17 percent. (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25) Value of stock $29.36 (a2) What is the current value of this stock? (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25) Current value of stock

Blossom Infotech is a fast-growing communications company. The company did not pay a dividend last year and is not expected to do so for the next two years. Last year the company’s growth accelerated, and management expects to grow the business at a rate of 40 percent for the next five years before growth slows to a more stable rate of 7 percent. In the third year, management has forecasted a dividend payment of $1.40. Dividends will grow with the company thereafter. (a1) Your answer is correct. Calculate the value of the company’s stock at the end of its rapid growth period (i.e., at the end of five years). The required rate of return for such stocks is 17 percent. (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25) Value of stock $29.36 (a2) What is the current value of this stock? (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25) Current value of stock

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 14EA: Blanket Company has paid quarterly dividends every quarter for the past 15 years. Lately, slowing...

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(a1)

Your answer is correct.

Calculate the value of the company’s stock at the end of its rapid growth period (i.e., at the end of five years). The required rate of return for such stocks is 17 percent. (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25)

Value of stock

$29.36

(a2)

What is the current value of this stock? (Round intermediate calculations to 3 decimal places, e.g. 15.257 and final answer to 2 decimal places, e.g. 15.25)

Current value of stock

Leveraging special tenchniques in analyzing historical data to predict future trends. Forecasting covers the methods and types of forecasting and their application to case studies.

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