A Company Forecasts Growth of 6% for the Next Five

question 49

Multiple Choice

A company forecasts growth of 6% for the next five years and 3% thereafter.Given last year's free cash flow was $100,what is its horizon value if the company cost of capital is 8%?

• A)$0
• B)$1,672
• C)$2,000
• D)$2,676

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Definitions:

Subsidiary Ledger

A detailed ledger that contains the individual accounts related to a specific category, supplementing the general ledger.

Consignment

An arrangement where goods are left with a third party to sell, but ownership remains with the supplier until the goods are sold.

Consignee

The retailer in a consigned inventory arrangement.

Retailer

A business entity that sells goods or services directly to consumers through various distribution channels to earn a profit.