The Growth in Per Share FCFE of CBS, Inc

question 65

Multiple Choice

The growth in per share FCFE of CBS, Inc.is expected to be 10% per year for the next two years, followed by a growth rate of 5% per year for three years; after this five-year period, the growth in per share FCFE is expected to be 2% per year, indefinitely.The required rate of return on CBS, Inc.is 12%.Last year's per share FCFE was $2.00.What should the stock sell for today

• A)$8.99
• B)$22.51
• C)$40.00
• D)$25.21
• E)$27.12

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Definitions:

Auditing Standards

Rules and guidelines set by governing bodies that dictate the auditing process, ensuring consistency, and reliability in financial reporting.

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, including those related to financial statements and corporate governance.

Authoritative Accounting Guidance

Officially recognized principles and standards that govern financial reporting and accounting practices.

ASC

Accounting Standards Codification, the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities in the United States.