Sinclair ^{Pharmaceuticals},a Small Drug Company,develops a Vaccine That Will Protect

Multiple Choice

Sinclair ^{Pharmaceuticals},a small drug company,develops a vaccine that will protect against Helicobacter pylori,a bacteria that is the cause of a number of diseases of the stomach.It is expected that Sinclair ^{Pharmaceuticals} will experience extremely high growth over the next three years and will reinvest all of its earnings in expanding the company over this time.Earnings were $1.20 per share before the development of the vaccine and are expected to grow by 40% per year for the next three years.After this time,it is expected growth will drop to 5% and stay there for the expected future.Four years from now Sinclair will pay dividends that are 75% of its earnings.If its equity cost of capital is 10%,what is the value of a share of Sinclair ^{Pharmaceuticals today?}

A) $33.33
B) $38.96
C) $48.30
D) $52.00
E) $54.45