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:

Anticipate Potential Problems

The process of forecasting future challenges or issues that may arise during the course of a project or in the operation of a system, with the aim of mitigating them in advance.

Preventive Action

Steps taken to identify and eliminate potential issues before they occur to prevent future problems.

Benchmarking

Uses external comparisons to gain insights for planning.

Best Practices

Best practices refer to the most efficient and effective methods of operating or performing tasks, identified through experience and research, which serve as benchmarks for businesses or organizations.