Compute the Value of a Firm with Free Cash Flows

question 3

Multiple Choice

Compute the value of a firm with free cash flows of $4,000, $4,500, and $5,000 over the next three years, a terminal firm value of $60,000 after three years, and the unlevered cost of capital is 10%. Assume that the interest rate tax shield is zero.

• A) $56,191
• B) $57,234
• C) $58,098
• D) $59,123

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Definitions:

Boards of Directors

Groups of elected or appointed members who jointly oversee the activities of a company or organization.

Nonverbal Communication

The process of conveying a message or piece of information without the use of spoken or written language, instead through body language, gestures, facial expressions, and tone of voice.

Face-to-Face Communication

Direct interaction between two or more people, where participants can see and respond to each other in real-time.

Total Message

encompasses all aspects of communication, including verbal content, non-verbal cues, and contextual factors, contributing to the overall understanding between parties.