On a Certain Day in February 2008, Amazon

question 27

Multiple Choice

On a certain day in February 2008, Amazon.com's forward P/E was reported to be 32.31 and its beta was 3.04. The relevant risk-free rate at the time was 3%. Assume that 5% is a reasonable
Equity premium to use. What does this data suggest Amazon's expected eternal earnings
Growth rate was?

• A)15.2%
• B)35.9%
• C)21.2%
• D)13.8%