Oil and Gas stock prices are estimated to increase by 6% each year for the next 8years. The cost of one share is $225 in year 1. If the interest rate is equal with the gradient rate, how much is the value of one share by the end of the year 8

Question

Tucker Snyder

Business

12 June, 10:37

Oil and Gas stock prices are estimated to increase by 6% each year for the next 8years. The cost of one share is $225 in year 1. If the interest rate is equal with the gradient rate, how much is the value of one share by the end of the year 8

+5

Answers (1)

Know the Answer?

Rylie Huber · Answer 1

The value of one share by the end of year 8 is $358.62

Explanation:

We need to grow the price of the share for next 8 years in order to calculate the price of the share at the end of year 8.

Use following formula to calculate the price of one share after 8 years.

Price at the end of year 8 = Today's Price x (1 + Growth rate) ^numbers of years

Price at the end of year 8 = $225 x (1 + 6%) ^8

Price at the end of year 8 = $358.62