Franklin Industries Has a Current Net Working Capital of $1

question 24

Multiple Choice

Franklin Industries has a current net working capital of $1 million.It expects that this will grow at a rate of 3% annually forever.What growth rate in working capital would the firm require in order to achieve a $2 million increase in firm value,given that it has a cost of capital of 7%?

• A)2%
• B)2.7%
• C)3.3%
• D)1.4%
• E)4%

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Definitions:

Human Relations

The study and practice of improving interactions and relationships among people within an organization.

High Morale

A state in which employees are motivated, satisfied, and have a positive outlook towards their work and workplace.