General Industries Is Expected to Generate the Above Free Cash

question 13

Multiple Choice

General Industries is expected to generate the above free cash flows over the next five years,after which free cash flows are expected to grow at a rate of 3% per year.If the weighted average cost of capital is 8% and General Industries has cash of $10 million,debt of $40 million,and 80 million shares outstanding,what is General Industries' expected current share price?

• A)$6.60
• B)$6.72
• C)$7.67
• D)$9.48

---

Definitions:

Conditional

A logical statement that connects two propositions, such that the second proposition follows from the first, typically formulated as "if... then..."

Equivalent Statements

Sentences that have the same truth value in every possible situation.

Biconditional

A logical statement wherein two propositions are true or false together; it is true if both parts have the same truth value.

Component

An element or part of a larger whole, especially in systems, machines, or products, contributing to or comprising a function or structure.