A Company Is Expected to Have Free Cash Flows of $0.75

question 85

Multiple Choice

A company is expected to have free cash flows of $0.75 million next year.The weighted average cost of capital is WACC = 10.5%, and the expected constant growth rate is g = 6.4%.The company has $2 million in short-term investments, $2 million in debt, and 1 million shares.What is the stock's current intrinsic stock price?

• A) $17.39
• B) $17.84
• C) $18.29
• D) $18.75
• E) $19.22

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Definitions:

Cross-Sectional Studies

Observational studies that analyze data from a population at a specific point in time to investigate patterns and correlations.

Longitudinal Studies

Research designs that follow the same subjects over a period of time, allowing for the observation of changes or developments in the subjects.

Dependent Variable

In an experimental study, it is the variable being tested and measured, influenced by the independent variable.

Heart Rate

The number of heartbeats per unit of time, usually measured in beats per minute (bpm).