The Growth in Per Share FCFE of CBS, Inc

question 6

Multiple Choice

The growth in per share FCFE of CBS, Inc.is expected to be 10% per year for the next two years, followed by a growth rate of 5% per year for three years.After this five-year period, the growth in per share FCFE is expected to be 2% per year, indefinitely.The required rate of return on CBS, Inc.is 12%.Last year's per share FCFE was $2.00.What should the stock sell for today?

• A)$8.99
• B)$22.51
• C)$40.00
• D)$25.21

---

Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced. It includes both fixed and variable costs.

Marginal Product

Marginal Product is the additional output that results from using one more unit of a particular input, holding other inputs constant.

Average Product

The output per unit of input, typically calculated by dividing total output by the quantity of a specific input used.

Average Total Cost

The total cost divided by the number of units produced, representing the cost per unit of output.