Smart Draw Company Is Expected to Have Per Share FCFE

Smart Draw Company is expected to have per share FCFE in year 1 of $1.20, per share FCFE in year 2 of $1.50, and per share FCFE in year 3 of $2.00. After year 3, per share FCFE is expected to grow at the rate of 10% per year. An appropriate required return for the stock is 14%. The stock should be worth _______ today.

A) $33.00
B) $40.68
C) $55.00
D) $66.00
E) $12.16

Correct Answer:

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