SGA Consulting Had a FCFE of $3

question 56

Multiple Choice

SGA Consulting had a FCFE of $3.2M last year and has 3.2M shares outstanding.SGA's required return on equity is 13% and WACC is 11.5%.If FCFE is expected to grow at 8.5% forever,the intrinsic value of SGA's shares are ____________.

• A)$21.60
• B)$26.56
• C)$244.42
• D)$24.11
• E)none of the above

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Definitions:

Labour Efficiency

The measure of the amount of work achieved by a workforce compared to the effort put in.

Material Quantity

The amount of raw materials or supplies used in the production of goods, often monitored to control costs and ensure efficient resource use.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the hours worked.

Favourable Variance

A financial term indicating that actual costs were lower than budgeted costs, or actual revenues were higher than expected.