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:

Data Analysis

The process of examining, cleaning, transforming, and modeling data with the goal of discovering useful information, informing conclusions, and supporting decision-making.

Primary Data

This is data collected directly from its source for the first time, used for a specific research purpose.

Marketing Information System

A system that gathers, analyzes, and disseminates data relevant to a company’s marketing activities.

Demographic Segmentation

Dividing markets on the basis of various demographic or socioeconomic characteristics such as gender, age, income, occupation, household size, stage in family life cycle, education, or ethnic group.