Skip to content
Sign inRegister

ACCA Forums

FMShare Price

Mmichellegordon15y ago
Can someone help me in figuring out this question?
June 2008 question 1A, how did they come by the figure of 1.06
when they were calculating the "share price in 6 years time"

Thanks
Former userFormer user15y ago#1
Hi

It states that the share price is expected to rise at a rate of 6% = 6/100 = 0.06. Therefore if the share price is $5.50 (t0) then in 1 years time (t1) it will be 6% more so you need to multiply the share price by 106% ie 1.06.

to = 5.50
t1 = 5.50 x 1.06 = 5.83
t2 = 5.83 x 1.06 = 6.18
.
.
t6 = 5.50 x 1.06^6 = 7.80

Sarah
Mmichellegordon15y ago#2
Oh comprehend, Thanks alot
Sign into reply to this topic.