Suppose an Analyst Estimates That Free Cash Flow Will Be

question 26

Multiple Choice

Suppose an analyst estimates that free cash flow will be $2.43 million in year 5.What is the present value of this free cash flow if the company cost of capital is 12%,the WACC is 10%,and the equity cost of capital is 15%?

• A) 1.21 million
• B) 1.38 million
• C) 1.51 million
• D) 2.43 million

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Definitions:

Louisiana Purchase

The 1803 acquisition by the United States of approximately 828,000 square miles of territory from France, more than doubling the size of the U.S. at the time.

Republicanism

A political ideology that values the principles of a republic, emphasizing representative democracy, civic virtue, and opposition to monarchy and tyranny.

Napoleon

A French military leader and emperor who rose to prominence during the French Revolution and subsequent Napoleonic Wars, known for his significant impact on European history.

Louverture

Toussaint Louverture was a leader of the Haitian Revolution, renowned for his military and political acumen that led to the establishment of an autonomous government in Haiti.