Exhibit 14.4 Use the Information Below for the Following Problem(S)

question 56

Multiple Choice

Exhibit 14.4
Use the Information Below for the Following Problem(S)
The Valentine Company currently has a 14% annual growth rate while the market average is 4 percent. The market multiple is 15.
-Refer to Exhibit 14.4.Determine the justified P/E ratio for the Valentine Company assuming Valentine can maintain its superior growth rate for the next 10 years.

• A) 3.0
• B) 9.2
• C) 16.6
• D) 28.6
• E) 37.6

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Definitions:

Linear Perspective

A depth cue in visual perception that parallel lines appear to converge as they recede into the distance.

Artistic Ploy

A strategic or imaginative technique employed by artists to achieve a particular effect or to engage the audience.

Interposition

A visual clue in depth perception, where an object overlapping another is perceived as closer to the viewer.

Convergence

The coming together of different factors or phenomena to a single point.