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

question 10

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 would the estimated value of the U.S.market be today using the FCFE approach,if the growth rate was expected to be a constant 8% indefinitely,instead of the 10% and 7% estimates?

• A) 4,500
• B) 4,728
• C) 4,860
• D) 4,923
• E) 5,042

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Definitions:

Military Service

The performance of duty by members of the armed forces or citizens conscripted or enlisted for a period of service to protect and serve their country.

Confederate Hospitals

Medical facilities established by the Confederate States during the American Civil War to treat soldiers injured in battle, often facing challenges such as limited resources and overcrowding.

Jefferson Davis

The President of the Confederate States of America during the American Civil War, from 1861 to 1865.

Confederate Cause

The ideologies, efforts, and motivations behind the Southern states' secession from the United States to form the Confederacy, primarily in defense of states' rights and the preservation of slavery.