Estimate a Venture's Terminal Value Based on the Following Information

question 28

Multiple Choice

Estimate a venture's terminal value based on the following information: current year's net sales = $500,000; next year's expected cash flow = $16,000; constant future growth rate = 10%; and venture investors' required rate of return = 20%.

• A)$285,714
• B)$200,000
• C)$150,000
• D)$160,000

---

Definitions:

Sleep Terrors

A sleep disorder causing feelings of terror or dread, commonly involving screaming, flailing, and intense fear during sleep, more often in children.

Somnambulism

A sleep disorder known as sleepwalking, where the person walks or performs other complex behaviors while still asleep.

Deep Sleep

A stage of sleep characterized by slow brain waves, known as delta waves, during which the body repairs and regrows tissues, builds bone and muscle, and strengthens the immune system.

Preoperational Stage

The second stage in Piaget’s scheme, characterized by inflexible and irreversible mental manipulation of symbols.