If a Company Is Currently Generating a Free Cash Flow

question 117

True/False

If a company is currently generating a free cash flow of $10 per share,which is expected to continue indefinitely,and if the discount rate is 10%,the estimated share price would be $100.

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Definitions:

Conceptual Skills

Ability to see the organization as a unified whole and to understand how each part interacts with others.

Long-range Plans

are strategic plans that outline an organization's goals, strategies, and actions for a period typically extending beyond five years.

Top-level Managers

Senior executives within an organization who are responsible for making long-term strategic decisions and ensuring the overall success and direction of the company.

Organization's Performance

A measure of how effectively and efficiently an organization achieves its objectives and fulfills its mission, often evaluated through metrics like profitability, productivity, and quality.