Consider the Following Data for Kriya Company $\begin{array} { r l l l l l } \text { Year: } & 1 & 2 & 3 & 4 \\\text { Free Cash Flow (FCF) (in millions) : } & 4 & 5 & 6 & 6.24\end{array}$

question 57

Multiple Choice

Consider the following data for Kriya Company: $\begin{array} { r l l l l l } \text { Year: } & 1 & 2 & 3 & 4 \\\text { Free Cash Flow (FCF) (in millions) : } & 4 & 5 & 6 & 6.24\end{array}$ A constant growth rate of 4 percent is sustained forever after year 3.The weighted average cost of capital is 10 percent.Calculate the present value of the horizon value.(Assume that the horizon value includes the 6.24M FCF in year 4.)

• A)$90.4 million
• B)$104 million
• C)$78.1 million
• D)$75.1 million

Evaluate and compare different loan offers based on interest rates, compounding periods, and payment schedules.

Understand the financial calculations related to annuities, perpetuities, and consol bonds.

Analyze the impact of payment frequency on the savings and loans.

Grasp the concepts of present and future values of money in decision making.

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Definitions:

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or output in a business.

Recession

A period of declining real GDP, accompanied by lower real income and higher unemployment.

Average Fixed Cost

The fixed expenses of a business spread out over the total number of units produced, decreasing as production increases.

Total Revenues

The total income generated by a firm from its sales activity, calculated by multiplying the selling price by the quantity sold.