Exhibit 14 From Year 2019 Onward Growth in OFCF Is Expected to

question 128

Multiple Choice

Exhibit 14.8
Use the Information Below for the Following Problem(S)
At the end of the year 2010 the CKL Corporation had operating free cash flow (OFCF) of $300,000 and shares outstanding of 100,000. Total debt is currently $10,000,000. The company projects the following annual growth rates in OFCF
$$\begin{array} { c c } \text { Year } & \text { Grapth Rata } \\\hline 2011 & 25 \% \\2012 & 20 \% \\2013 & 15 \% \\2014 & 10 \% \\2015 & 12 \% \\2016 & 14 \% \\2017 & 16 \% \\2018 & 18 \%\end{array}$$
From year 2019 onward growth in OFCF is expected to remain constant at 5% per year. The stock has a beta of 1.1 and the current market price is $80. Currently the yield on 10-year Treasury notes is 5% and the equity risk premium is 4%. The firm can raise debt at a pre-tax cost of 9%. The tax rate is 25%. The proportion of equity is 55% and the proportion of debt is 45%.
-Refer to Exhibit 14.8.Calculate the present value now (Year 2010) of OFCF during the period of declining growth (that is for years 2011 to 2014) .

• A) $1,044,612
• B) $1,554,823
• C) $1,898,096
• D) $1,327,547
• E) $1,579,326

Discuss the concept of money as a veil in classical economics and its implications for economic analysis.

Analyze how perceived changes in wealth affect aggregate demand.

Understand the concept of monetary neutrality and its exceptions in the short term as observed by classical economists.

Explain the effects of investment tax credits on aggregate demand.

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Definitions:

Stretch Reflex

A muscle contraction in response to stretching within the muscle, functioning as a protective mechanism to prevent overstretching.

Golgi Tendon Reflex

A protective reflex mechanism through which the tension in a muscle tendon is regulated, preventing potential damage from excessive force.

Crossed Extensor Reflex

A reflex action in which the extension of one limb is paired with the flexion of the contralateral limb.

Common Fibular Nerve

A branch of the sciatic nerve that innervates the muscles of the lower leg, contributing to foot and toe movement and sensation.