Mad Rock Inc. is a company that sells 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. The stock price of Mad Rock has rocketed from $8 to $95 per share in the past 12 months. The cost of capital 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.