Use the Information for the Question(s)below

question 45

Multiple Choice

Use the information for the question(s) below.
You expect CCM Corporation to generate the following free cash flows over the next five years: Following year five,you estimate that CCM's free cash flows will grow at 5% per year and that CCM's weighted average cost of capital is 13%.
-If CCM has $200 million of debt and 8 million shares of stock outstanding,then the share price for CCM is closest to:

• A)$49.50.
• B)$12.50.
• C)$19.35.
• D)$24.50.

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Definitions:

Standard Cost

A predetermined or budgeted cost of manufacturing a product or performing a service, used as a benchmark to measure performance.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Materials Price Variance

It measures the difference between the actual cost and the standard cost of direct materials used in production, indicating how effectively a company is purchasing its raw materials.

Actual Costs

The actual expenses incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.