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 first three dividends are worth _______ today.
A) $2.54
B) $3.56
C) $4.32
D) $2.37
E) None of the above

Question

Quizplus · Accepted Answer

The Answer of 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 first three dividends are worth _______ today.
A) $2.54
B) $3.56
C) $4.32
D) $2.37
E) None of the above

Smart Draw Company Is Expected to Have Per Share FCFE