Exhibit 12.7 Use the Information Below for the Following Problem(S)

question 82

Multiple Choice

Exhibit 12.7
Use the Information Below for the Following Problem(S)
You are using the free cash flow to equity (FCFE) technique to analyze U.S. equity market. The beginning FCFE is $90 and the required rate of return is 10%. Free cash flows are expected to grow at a 10% rate for the next two years and then grow at a constant rate of 7% forever.
-Refer to Exhibit 12.7.What is the estimated value of the U.S.market today using the FCFE approach?

• A) 2,852
• B) 2,918
• C) 3,210
• D) 3,390
• E) 3,884

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Definitions:

Fractured Dens

A break in the dens, which is a bony projection off the second cervical vertebra, potentially affecting spinal stability and nerve function.

Spina Bifida

A birth defect where there is an incomplete closing of the backbone and membranes around the spinal cord.

Vertebral Laminae

The vertebral laminae are flattened plates of bone originating from the pedicles of the vertebral arch, forming the posterior part of the vertebral foramen.

Coccyx

The coccyx, commonly known as the tailbone, is the small, triangular bone at the bottom of the spine, consisting of several fused vertebrae.