Justus Motor Co

question 83

Multiple Choice

Justus Motor Co.has a WACC of 11.50%, and its value of operations is $25.00 million.Justus's free cash flow is expected to grow at a constant rate of 7.00%.What was the last free cash flow, FCF₀ in millions?

• A) $0.95
• B) $1.05
• C) $1.16
• D) $1.27
• E) $1.40

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Definitions:

Natural Rate

often refers to the natural rate of unemployment, where the economy is at equilibrium, taking into account the frictional and structural factors.

Potential GDP

The maximum possible level of output an economy can achieve when it is most efficiently utilizing its resources.

Unemployment

A situation where individuals who are able and willing to work cannot find jobs, measured as a percentage of the labor force.

Expansionary Fiscal Policy

Government policy aimed at stimulating economic growth by increasing government spending, reducing taxes, or both.