Exhibit 20-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 77

Multiple Choice

Exhibit 20-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Fast Grow Corporation is expecting dividends to grow at a 20% rate for the next two years. The corporation just paid a $2 dividend and the next dividend will be paid one year from now. After two years of rapid growth dividends are expected to grow at a constant rate of 9% forever.
-Refer to Exhibit 20-8. If the required return is 14%, what is the value of Fast Grow Corporation common stock today?

• A) $40.26
• B) $42.38
• C) $46.70
• D) $52.63
• E) $62.78

---

Definitions:

Ego

In psychoanalytic theory, the part of the personality responsible for dealing with reality while mediating between the desires of the id and the morals of the superego.

Libido

A term used in psychoanalytic theory to denote the energy of the sexual drive as a component of the life instinct.

Unconscious

The part of the mind that contains thoughts, memories, and desires not within immediate awareness but influencing behavior.

Neurotics

Individuals who suffer from neurosis, a psychological condition marked by chronic distress but not by delusions or hallucinations.