Bulldog Industries An Analyst Seeks to Determine the Value of Bulldog Industries

question 26

Multiple Choice

Bulldog Industries
An analyst seeks to determine the value of Bulldog Industries. After careful research, the analyst believes that free cash flows for the firm will be $80 million in 2004 and will grow at 10% for 2005 and 2006. The free cash flows will grow at a rate of 5% after 2006.
-If Bulldog Industries has a weighted average cost of capital of 10%,find the market value of the firm.(assume that we are at January 1,2004)

• A) $2,085.26
• B) $1,946.52
• C) $1,745.45
• D) $1,665.45

---

Definitions:

Employment Level

Refers to the total number of people currently employed in the economy, indicative of its health and labor market status.

Price Level

An index that measures the average prices of goods and services in an economy at a given time.

AS Curve

The Aggregate Supply curve, depicting the total supply of goods and services that firms in an economy will produce at different price levels.

Classical Theory of Employment

An economic theory that posits that the economy naturally operates at a level of full employment due to the flexibility of prices and wages.