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

question 53

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 P/E ratio for the Valentine Company assuming Valentine can maintain its superior growth rate for the next 5 years.

• A) 23.7
• B) 16.4
• C) 15.3
• D) 8.3
• E) 3.8

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Definitions:

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a relatively safe investment.

Vault Cash

Paper currency and coins held by a bank in its vault and used to satisfy demands for withdrawals or to resolve deficits in reserve accounts.

Federal Securities

Financial instruments issued by the federal government, such as treasury bills and bonds, used to raise funds for governmental expenditures.

Common Stock

Common stock is a type of security that represents ownership in a corporation, with holders typically having voting rights and potential dividends.