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Your Boss, Sally Maloney, Treasurer of Fred Clark Enterprises (FCE)Sally

question 66

Multiple Choice

Your boss, Sally Maloney, treasurer of Fred Clark Enterprises (FCE) Sally told you that the growth rates in the template were just put in as a trial, and that you must replace them with the analysts' forecasted rates to get the correct forecasted dividends and then the estimated HV. She also notes that the estimated value for rs, at the top of the template, is also just a guess, and you must replace it with a value that will cause the Calculated Price shown at the bottom to equal the Actual Market Price. She suggests that, after you have put in the correct dividends, you can manually calculate the price, using a series of guesses as to the Estimated rs. The value of rs that causes the calculated price to equal the actual price is the correct one. She notes, though, that this trial-and-error process would be quite tedious, and that the correct rs could be found much faster with a simple Excel model, especially if you use Goal Seek. What is the value of rs?

Definitions:

Vertebral Arteries

Arteries that ascend in the neck and supply blood to the brain and spinal column.

Velocity

The rate of change of an object's position with respect to time, incorporating both speed and the direction of movement.

Arterioles

Small branches of arteries leading into capillaries, key in regulating blood flow and pressure.

Aorta

The aorta is the largest artery in the body, originating from the left ventricle of the heart and extending down to the abdomen, where it splits into smaller arteries.