You Have Been Assigned the Task of Using the Corporate,or

question 77

Multiple Choice

You have been assigned the task of using the corporate,or free cash flow,model to estimate Petry Corporation's intrinsic value.The firm's WACC is 10.00%,its end-of-year free cash flow (FCF₁) is expected to be $70.0 million,the FCFs are expected to grow at a constant rate of 5.00% a year in the future,the company has $200 million of long-term debt and preferred stock,and it has 30 million shares of common stock outstanding.Assume the firm has zero non-operating assets.What is the firm's estimated intrinsic value per share of common stock? Do not round intermediate calculations.

• A) $48.80
• B) $34.40
• C) $36.80
• D) $49.60
• E) $40.00

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Definitions:

Shaping

A method of teaching new behaviors by using reinforcement until the target behavior is achieved, often through successive approximations.

Partial Reinforcement

A conditioning process in which a reward is not administered every time the desired action is performed, leading to more resistant behavior to extinction.

Classroom Answers

Refers to responses given by students or participants in an educational setting, usually in response to questions posed by teachers or instructors.

Negative Reinforcer

A stimulus whose removal or avoidance after a behavior increases the likelihood of that behavior occurring again in the future.