Chris Norton is a young Hollywood writer who is well on his way to television superstardom. After writing several successful television specials, he was recently named the head writer for one of TV's top-rated sitcoms. Chris fully realizes that his business is a fickle one and, on the advice of his dad and manager, has decided to set up an investment program. Chris will earn about a half-million dollars, he has decided to invest in speculative, high-growth stocks.

Chris is currently working with a respected Beverly Hills broker and is in the process of building up a diversified portfolio of speculative stocks. The broker recently sent him information on a hot new issue. She advised Chris to study the numbers and, if he likes them, to by as many as 1,000 shares of the stock. Among other things, corporate sales for the next 3 years have been forecasted as follows:

Year	Sales ($ in millions)
1	22.5
2	35.0
3	50.0

Common shares outstanding:	2.5	million
Being traded at:	$70	per share
Pays no dividends.
Net profit rate:	20%
Stock has been trading at a P/E of around 40 times of earnings.	40%

1. Compute the company's net profits and EPS for each of the next 3 years. 2. Compute the price of the stock 3 years from now. 3. Assuming that all expectations hold up and that Chris buys the stock at $70, determine his expected return on this investment. 4. What risks is he facing by buying this stock? 5. Should he consider the stock a worthwhile investment candidate? Please provide specific details of how to calculate each item needed.