Final answer:
The variable-growth rate stock valuation method is a formula used in finance to determine the future value of a stock, given its present value and the expected growth rate.
Step-by-step explanation:
The variable-growth rate stock valuation method is a formula used in finance to determine the future value of a stock, given its present value and the expected growth rate. The formula is Future Value = Present Value x (1 + g)^n, where g represents the growth rate and n represents the number of periods. By inputting the present value, growth rate, and number of periods into this formula, you can calculate the estimated future value of a stock.
For example, if you have a stock with a present value of $100 and an expected growth rate of 5% per year for 3 years, you can calculate the future value as follows:
- Future Value = $100 x (1 + 0.05)^3
- Future Value = $115.76