Mad Rock Inc. is a company that sells mp3 music online. It is expected to generate earnings

Question:

Mad Rock Inc. is a company that sells mp3 music online. It is expected to generate earnings of $1 per share this year after its Web site is upgraded and online marketing is stepped up. Given the popularity of the iPod and iPad devices, the stock price of Mad Rock has rocketed from $8 to $95 per share in the past 12 months. The for the company is 18 percent.
Of course, the future of a young Internet company such as Mad Rock is highly uncertain. Nevertheless, using the very limited information provided in this problem, do you think $95 per share could be a fair price for its stock? Support your argument with a simple analysis.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...