Franklin Industries Has a Current Net Working Capital of $2

question 27

Multiple Choice

Franklin Industries has a current net working capital of $2.5 million. It expects that this will grow at a rate of 3.5% annually forever. If it could slow that growth to 3% per year, how would that affect the value of the firm, given that it has a cost of capital of 11%?

• A)an increase of $2.08 million
• B)a decrease of $2.22 million
• C)an increase of $12 500
• D)an increase of $0.78 million

---

Definitions:

Revenue Tariff

A tax imposed on imported goods primarily for generating government revenue rather than protecting domestic industries.

Generate Income

The process of creating revenue or earnings through various sources such as work, investments, or business activities.

Converted

Changed or transformed from one state, form, or function to another.