Exhibit 13.3 Use the Information Below for the Following Problem(S)

question 78

Multiple Choice

Exhibit 13.3
Use the Information Below for the Following Problem(S)
The Home Appliance Industry had free cash flow to equity (FCFE) of $87 for the most recent year ending reported yesterday. The industry anticipates a growth rate of 8% for the next three years due to favorable economic conditions. However, the growth rate is expected to decline to 4% after three years and remain at that level indefinitely. The required rate of return is 12% for this industry.
-Refer to Exhibit 13.3.Calculate the intrinsic value of the Home Appliance Industry at the end of the 8% growth period three years from now.

• A) $109.59
• B) $113.98
• C) $949.83
• D) $1,369.94
• E) $1,424.73

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Definitions:

Performance-Based Pay

A compensation system in which an employee’s financial remuneration is directly linked to their performance or productivity.

Advantages

The favorable positions or conditions gained by a person or organization that provide a better opportunity for success.

Disadvantages

Negative or unfavorable aspects and conditions that hinder success or effectiveness.

Labor Costs

Expenses related to compensating employees, including wages, salaries, benefits, and taxes, incurred by an employer.