Zero Had a FCFE of $4

question 47

Multiple Choice

Zero had a FCFE of $4.5M last year and has 2.25M shares outstanding. Zero's required return on equity is 10%, and WACC is 8.2%. If FCFE is expected to grow at 8% forever, the intrinsic value of Zero's shares is

• A) $108.00.
• B) $1080.00.
• C) $26.35.
• D) $14.76.
• E) None of the options are correct.

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Definitions:

Extinction Procedure

A method used in behavior psychology to reduce or eliminate the occurrence of a conditioned response by discontinuing reinforcement.

Reinforcer

An element used in behavioral psychology to encourage the repetition of a desired behavior by providing a consequence that the individual finds rewarding.

Behavior

The way a person responds or behaves in reaction to outside or inside triggers.

Negative Reinforcement

A behavioral strategy involving the removal of an unpleasant stimulus in response to a desired behavior to increase the likelihood of that behavior occurring in the future.