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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