$25$

$2$ points

Suppose that Pandora Media $($P$)$ currently pays no dividends. Assume that the current book value per share of P is $$2\mathrm{.}28$ and the required return on the stock $(k)$ is $9\%.$ The firm expects earnings per share next year $(E_1)$ to equal $$1\mathrm{.}30$ with annual earnings growth $(g)$ of $4\%.$ Using the Residual Income Model the current market value of Pandora Media is approximately equal to:

$$33\mathrm{.}96$

$$36\mathrm{.}33$

$$24\mathrm{.}18$

$$18\mathrm{.}27$

$$13\mathrm{.}88$