Business question: What should the stock price per share be in 5 years?

timer Asked: Dec 16th, 2015
account_balance_wallet $5

Question Description

a firms stock price is $25 per share and is expected to grow at a 5% compound annual rate.  What should the stock price per share be in 5 years?

Tutor Answer

School: Cornell University

Thank you for the opportunity to help you with your question!


A = P(1 + r/n)nt


  • A = Accrued Amount (principal + interest)
  • P = Principal Amount
  • I = Interest Amount
  • R = Annual Nominal Interest Rate in percent
  • r = Annual Nominal Interest Rate as a decimal
  • r = R/100
  • t = Time Involved in years, 0.5 years is calculated as 6 months, etc.
  • n = number of compounding periods per unit t; at the END of each period
A = 25(1 + .05/1)^1*5

Please let me know if you need any clarification. I'm always happy to answer your questions.

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Excellent job

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