A Colleague Recommends a Shortcut to Value the Company in the Preceding

question 6

True/False

A colleague recommends a shortcut to value the company in the preceding question.Rather than compute each scenario separately,the colleague recommends averaging each input,such that growth equals 5 percent and ROIC equals 15 percent.This will lead to the same enterprise value as found in that question.

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Definitions:

Unrecognized Commitments

Obligations that are not recorded in the financial statements because they do not meet the conditions for recognition as liabilities.

Foreign Exchange Risk

The potential for financial loss due to fluctuations in the exchange rate between two currencies.

Import Purchase

The act of buying goods and services from a foreign country to be brought into the buyer's home country.

Foreign Currency

Money or other form of payment issued by a government other than the home country of the business or individual.