If a Company's Free Cash Flows Are Expected to Grow

question 64

Multiple Choice

If a company's free cash flows are expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT?The stock is in equilibrium.

• A) the company's stock's dividend yield is 5%.
• B) the value of operations is expected to decline in the future.
• C) the company's wacc must be equal to or less than 5%.
• D) the company's value of operations one year from now is expected to be 5% above the current price.
• E) the expected return on the company's stock is 5% a year.

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Definitions:

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The default state or appearance of a cursor on a computer screen, typically an arrow.

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The shape of the cursor on a screen that indicates where text can be inserted.

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