Nico Corporation Expects to Generate Free-Cash Flows of $200,000 Per

question 177

Multiple Choice

Nico Corporation expects to generate free-cash flows of $200,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 5 percent per year forever. If the firm's average cost of capital is 15 percent, the market value of the firm's debt is $500,000, and Nico has a half million shares of stock outstanding, what is the value of Nico's stock?

• A) $2..43
• B) $3.43
• C) $1.43
• D) $0.00

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Definitions:

Potassium Ions

Charged particles of potassium that play critical roles in bodily functions, including nerve transmission and muscle contraction.

Sodium Ions

charged atoms of sodium, essential for various physiological processes including muscle function and fluid balance.

Positive Charge

An electrical condition that occurs when an atom loses electrons, resulting in a surplus of protons, giving it a net positive electric charge.

Glial Cells

Non-neuronal cells in the central nervous system that support, nourish, and protect neurons.