A financial analyst has been following Fast Start Inc., a new high-growth company. She estimates that the current risk-free rate is 6.25 percent, the market risk premium is 5 percent, and that Fast Start's beta is 1.75. The current earnings per share (EPS₀) is $2.50. The company has a 40 percent payout ratio. The analyst estimates that the company's dividend will grow at a rate of 25 percent this year, 20 percent next year, and 15 percent the following year. After three years the dividend is expected to grow at a constant rate of 7 percent a year. The company is expected to maintain its current payout ratio. The analyst believes that the stock is fairly priced. What is the current price of the stock?

	a.	$17.33
	b.	$19.25
	c.	$16.51
	d.	$18.53
	e.	$19.89

Financial Calculator Section The following question(s) may require the use of a financial calculator. A financial analyst has been tollowing Fast Start Inc., a new high-growth company. She estimates that the current risk-tree rate is 6.25 percent, the market risk premium is 5 pencent, and that Fast Start's beta is 1.75. The current earnings per share (EPSo) is $2.50. The company has a 40 pencent payout ratio. The analyst estimates that the company's dividend will grow at a rate od 25 percent this year, 20 percent next year, and 15 percent the tollowing year. After three years the dividend is expected to grow at a constant rate of 7 pencent a year. The company is expected to maintain its current payout ratio. The analyst believes that the stock is lairly priced. What is the current price ol the stock? a. $17.33 b, $19.25 o c, $16.51 o d. $18.53 o e. $19.89