Exhibit 12.7 Use the Information Below for the Following Problem(S)

Exhibit 12.7
Use the Information Below for the Following Problem(S)
You are using the free cash flow to equity (FCFE) technique to analyze U.S. equity market. The beginning FCFE is $90 and the required rate of return is 10%. Free cash flows are expected to grow at a 10% rate for the next two years and then grow at a constant rate of 7% forever.
-Refer to Exhibit 12.7.What will FCFE be three years from now?

A) 108.90
B) 116.52
C) 117.00
D) 119.79
E) 120.21