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LED stock is currently selling for $40 per share. This company does not currently pay any dividends and it is not expected to pay any
LED stock is currently selling for $40 per share. This company does not currently pay any dividends and it is not expected to pay any dividends in the next three years. Based on the last 12 months LED has a P/E ratio of 20. Earnings are expected to grow at a 22% annual compound growth rate for the next 3 years. At the end of the third year LED is expected to have a P/E ratio of 25. If an investor purchased LED today at $40 and held it for 3 years before selling, what percent annual rate of return can be expected?
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