Exhibit 13.3 Use the Information Below for the Following Problem(S)

question 56

Multiple Choice

Exhibit 13.3
Use the Information Below for the Following Problem(S)
The Home Appliance Industry had free cash flow to equity (FCFE) of $87 for the most recent year ending reported yesterday. The industry anticipates a growth rate of 8% for the next three years due to favorable economic conditions. However, the growth rate is expected to decline to 4% after three years and remain at that level indefinitely. The required rate of return is 12% for this industry.
-Refer to Exhibit 13.3.Calculate the FCFE at the end of the 8% growth period three years from now.

• A) $78.00
• B) $107.88
• C) $109.59
• D) $111.64
• E) $113.52

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Definitions:

Descriptive Statistics

Statistical measures that describe the results of a study; descriptive statistics include measures of central tendency (e.g., mean), variability (e.g., standard deviation), and correlation (e.g., Pearson r).

Prison Sentence

The punishment assigned by a court, typically involving incarceration, for someone convicted of a crime.

Physically Attractive

The attribute of being appealing or pleasing in appearance to the sensory perceptions of others.

Alpha Level

The probability of incorrectly rejecting the null hypothesis that is used by a researcher to decide whether an outcome of a study is statistically significant (most commonly, researchers use a probability of .05).