You Have Been Assigned the Task of Using the Corporate,or

question 66

Multiple Choice

You have been assigned the task of using the corporate,or free cash flow,model to estimate Petry Corporation's intrinsic value.The firm's WACC is 10.00%,its end-of-year free cash flow (FCF₁) is expected to be $75.0 million,the FCFs are expected to grow at a constant rate of 5.00% a year in the future,the company has $200 million of long-term debt and preferred stock,and it has 30 million shares of common stock outstanding.What is the firm's estimated intrinsic value per share of common stock?

• A)$40.35
• B)$41.82
• C)$43.33
• D)$44.85
• E)$46.42

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Definitions:

Directive Role

A directive role refers to a position or function within an organization where a person leads, guides, or influences others towards achieving certain goals or objectives.

Systematic Desensitization

A behavioral therapy technique used to help individuals overcome phobias and other anxiety disorders by gradually exposing them to the object or situation of their fear while teaching them relaxation techniques.

Phobias

Irrational fears of specific objects, activities, or situations, leading to intense anxiety and avoidance behavior.

Psychotherapy

A therapeutic treatment method used by mental health professionals to explore and help resolve personal, behavioral, or psychological problems.