Question

The price of Outdoor Designs, Inc. is now $60. The company pays no dividends. Fred Gray...

The price of Outdoor Designs, Inc. is now $60. The company pays no dividends. Fred Gray expects the price 4 years from now to be $87.85 a share. Should Fred buy Outdoor Designs if he wants a 12% rate of return?

-Select- YES or NO

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Answer #1

Market Price Price at 12% Return = Future Value/(1+required return) No.of periods 87.85/(1+0.12)^4 $ 55.83 Do not Buy the sha

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