Problem:
One share of Jumanji Inc. currently sells for $42 per share and has just paid an annual dividend of $1.25 per share. The investors in Jumanji expect the stock to earn an annual rate of return of 12%.
(a) What would have been the stock price today if Jumanji had no growth opportunities?
(b) What is the present value of growth opportunities?
(c) What is the rate of growth implied with the growth opportunities?
Additional Information:
This question is basically belongs to the Finance as well as it explains about computing stock price with no growth opportunities, present value of growth opportunities.