Vega Music's Projected Net Income and Free Cash Flows Are

question 21

Multiple Choice

Vega Music's projected net income and free cash flows are given above in thousands of dollars.Vega expects their net income and increases in net working capital to increase by 5% per year.If Vega were able to reduce its annual increase in working capital by 10% without affecting any other part of the business adversely,what would be the effect of this reduction on Vega's value,given a cost of capital of 13%?

• A)an increase of $500,000
• B)an increase of $1,370,000
• C)an increase of $2,500,000
• D)an increase of $3,800,000
• E)an increase of $350,000

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Definitions:

Lexical Decision Task

An experimental procedure where participants classify stimuli as words or non-words, used to investigate cognitive processes related to language.

Perceptual Masking Task

A technique in cognitive psychology used to investigate the limitations of sensory processing by presenting one visual stimulus immediately after another, influencing the perception of the first.

Dichotic Listening Task

A task in which a person hears two or more different, specially recorded messages over earphones and is asked to attend to one of them.