Estimate a Venture's Required Rate of Return Based on the Following

question 42

Multiple Choice

Estimate a venture's required rate of return based on the following information: terminal value = $400,000; current year's net income = $20,000; next year's expected cash flow = $25,000; and a constant growth rate = 7%.

• A) 6%
• B) 7%
• C) 8%
• D) 9%
• E) 10%

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