Epsilon Consultants Has the Following Projected Free Cash Flows to Equity

question 1

Multiple Choice

Epsilon Consultants has the following projected free cash flows to equity and other information. It has no non-operating assets. Calculate Epsilon's intrinsic value of equity using the FCFE model. $\begin{array} { l c c c } & \text { Year 1 } & \text { Year 2 } & \text { Year } 3 \\ \text { FCFE } & 1,000 & 1,200 & 1,260\\\text { Long-term FCFE growth }&5\%\\\text { Required return on equity }&9\% \end{array}$

• A) $28,440
• B) $31,284
• C) $34,413
• D) $37,854
• E) $41,640

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Definitions:

Large Crowds

Gatherings of a significant number of people in a specific location, often leading to unique social dynamics and behaviors.

Convergence Theory

A theory suggesting that group members' opinions tend to become more similar over time as they interact and exchange ideas.

Contagion Theory

A theory suggesting that emotions and behaviors can spread through groups as if they were infectious diseases.

Rumors

Unverified information or stories spread informally, typically reflecting people’s desires to understand or make sense of their social environment.