Siri Had a FCFE of $1

question 73

Multiple Choice

Siri had a FCFE of $1.6M last year and has 3.2M shares outstanding.Siri's required return on equity is 12% and WACC is 9.8%.If FCFE is expected to grow at 9% forever, the intrinsic value of Siri's shares are

• A)$68.13.
• B)$18.17.
• C)$26.35.
• D)$14.76.
• E)None of the options

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Definitions:

Net Proceeds

The amount of money made on a stock trade after the brokerage fees are paid.

Broker Fee

A flat fee or commission that a stockbroker charges for trade stocks.

Fractional Share

A portion of a single share of a company, allowing investment in smaller amounts than the full share price.

Capital Gain

The profit from the sale of assets such as stocks, bonds, or real estate, which exceeds the purchase price.