Manufacturing corporation according to gordon model

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Reference no: EM132053770

1. Felipe just made an investment of $700 in which he will earn 11% interest annually. He does not know if he is earning simple interest or compound interest. How much more in interest will he earn in three years if interest is compounded annually?

a. $50

b. $35

c. $15

d. $25

e. $20

2. Calculate P3 for the common stock of Ace Manufacturing Corporation according to Gordon's Model. Suppose the common stock of Ace Manufacturing currently sells for $35.50 per share. The last annual dividend of $2.50 is projected to grow by 3% next year and every year thereafter. Investors in this common stock expect a return of Ri = 6%. What is the stock's expected price 3 years from today?

$78.83

$79.83

$84.85

$89.61

$93.80

Reference no: EM132053770

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