The Growth in Per Share FCFE of CBS, Inc

question 109

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:

Cognitive Representations

Mental models or mental images that individuals form about objects, events, or people, based on their knowledge and experiences, which guide their interactions with the external world.

Physiological Responses

The body's automatic reactions to a stimulus, including changes in heart rate, breathing, and muscle tension, among others.

Emotions

Intricate mental conditions that encompass a trio of distinct elements: an individual's personal experience, a physical reaction, and an action or demonstrative response.

Automatic

Referring to processes or behaviors that occur spontaneously, without conscious thought or intention.