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Sarah wants to buy XYZ stock today. She estimates that it will be worth $490/share in exactly two-years from now, and she has a minimum return requirement of 15%. XYZ is not currently paying a dividend nor is it expected to pay one in the near future. What is the price Sarah should pay today for one share?

a. $371
b. $426
c. $490
d. $564

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Solution Summary

The solution calculates the price of a share.

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