A Financial Analyst Has Been Following Fast Start Inc

question 83

Multiple Choice

A financial analyst has been following Fast Start Inc., a new high-growth company. She estimates that the current risk-free rate is 6.25 percent, the market risk premium is 5 percent, and that Fast Start's beta is 1.75. The current earnings per share (EPS0) is $2.50. The company has a 40 percent payout ratio. The analyst estimates that the company's dividend will grow at a rate of 25 percent this year, 20 percent next year, and 15 percent the following year. After three years the dividend is expected to grow at a constant rate of 7 percent a year. The company is expected to maintain its current payout ratio. The analyst believes that the stock is fairly priced. What is the current price of the stock?

• A) $16.51
• B) $17.33
• C) $18.53
• D) $19.25
• E) $19.89  

Understand the theories of dreaming and their significance.

Recognize various sleep disorders, their symptoms, causes, and treatment options.

Understand the role of the suprachiasmatic nucleus and melatonin in regulating circadian rhythms.

Explore the genetic aspects of sleep and rhythmicity.

---

Definitions:

Future Value

The value of an investment at a specific date in the future, calculated by applying a rate of interest or return to the principal amount.

Annually

Occurring once every year or relating to a period of one year.

Rate Of Return

The prosperity or setback experienced by an investment over a fixed timeline, posited as a percentage of the investment’s nascent cost.

Savings Account

A deposit account held at a bank or other financial institution that provides a modest interest rate.