Compute the Value of a Firm with Free Cash Flows

question 44

Multiple Choice

Compute the value of a firm with free cash flows of $4 000, $4 500 and $5 000 over the next three years, a terminal firm value of $60 000 after three years, and the unlevered cost of capital is 10%. Assume that the interest rate tax shield is zero.

• A)$58 098
• B)$56 191
• C)$59 123
• D)$57 234

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Definitions:

Metabolic Rate

Energy use by an organism per unit time. See basal metabolic rate (BMR).

Hibernation

Long-term torpor in response to winter cold and scarcity of food. Compare with estivation.

Basking

Basking is a behavior observed in various animals, especially reptiles, where individuals expose themselves to sunlight or another heat source to regulate body temperature.

Cancer Risk

The probability of developing cancer over a certain period, influenced by genetic factors, lifestyle choices, and environmental exposures.