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:

Cultural Differences

Variations in the customs, values, behaviors, and artifacts of different societies or groups, often affecting communication and interaction among them.

Motivation

The inner drive or process that stimulates an individual to act towards achieving a desired goal.

Employees

Individuals hired by an organization to perform specific duties and tasks in exchange for compensation.

Incentive Pay

refers to additional compensation provided to employees as a means to motivate performance beyond normal expectations.