Smart Draw Company Is Expected to Have Per Share FCFE

question 21

Multiple Choice

Smart Draw Company is expected to have per share FCFE in year 1 of $1.20, per share FCFE in year 2 of $1.50, and per share FCFE in year 3 of $2.00. After year 3, per share FCFE is expected to grow at the rate of 10% per year. An appropriate required return for the stock is 14%. The stock should be worth _______ today.

• A) $33.00
• B) $40.68
• C) $55.00
• D) $66.00
• E) $12.16

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Definitions:

Field Named

A term indicating the identification or labeling of a specific field in databases or software forms.

Medium Date

A format setting used to display the date in a day-month-year (or similar) structure, typically with abbreviated months.

Format Property

Attributes that define the appearance, layout, or structure of data and objects within software applications.

SaleDate Field

A specific column in a database or spreadsheet designated for recording dates of sales transactions.