USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 101

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You are using the free cash flow to equity (FCFE) technique to analyze the U.S. equity market. The beginning FCFE is $90, and the required rate of return is 10 percent. Free cash flows are expected to grow at a 10 percent rate for the next two years and then grow at a constant rate of 7 percent forever.
-Compute the current earnings multiple if the dividend payout ratio for the aggregate market is 60 percent, the required rate of return is 11 percent, and the dividend growth rate is 8 percent.

• A) 15
• B) 20
• C) 25
• D) 30
• E) 35

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Definitions:

Firewall

A system (either hardware, software, or a combination of both) that prevents a specific type of information from moving between untrusted networks, such as the Internet, and private networks, such as your company’s network.

Untrusted Networks

Networks that are not secure, where the risk of data interception and unauthorized access is higher.

Private Networks

Networks designed for specific organization or group use, not accessible by the general public.

DMZ

A demilitarized zone in networking is a physical or logical subnetwork that separates an internal local area network (LAN) from other untrusted networks, typically the Internet.