If the required return on a stock is 15% and the future price of the stock one year from today is projected to be $32.00, what should be the current price for the stock assuming no dividends are paid?
A)$27.83
B)$36.80
C)$22.50
D)$29.50

Question

Quizplus · Accepted Answer

The current price of the stock can be calculated using the formula for the present value of a future cash flow: Present Value = Future Value / (1 + required return). Plugging in the given values: Present Value = $32.00 / (1 + 0.15) = $32.00 / 1.15 = $27.83.

If the Required Return on a Stock Is 15% and the Future