Smart Draw Company Is Expected to Have Per Share FCFE

question 65

Multiple Choice

Smart Draw Company is expected to have per share FCFE in year 1 of $1.20, per share FCFE in year 2 of $1.50, and per share FCFE in year 3 of $2.00.After year 3, per share FCFE is expected to grow at the rate of 10% per year.An appropriate required return for the stock is 14%.The stock should be worth _______ today.

• A)$33.00
• B)$40.68
• C)$55.00
• D)$66.00

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Definitions:

Distorted Thinking

Cognitive processes that twist incoming information, leading to misinterpretation and irrational beliefs.

Unrealistic Beliefs

Convictions that are not grounded in reality or evidence, often leading to misguided actions or judgments.

Cognitive Therapy

A type of psychotherapy focused on modifying dysfunctional emotions, behaviors, and thoughts through systematic procedures.

Contingency Contract

A contract format commonly used in behavioral economics and psychology, specifying the delivery of rewards or consequences contingent on the performance of the desired behavior.