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

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Definitions:

German Boards

Corporate governance structures in Germany, comprising two separate entities: the management board responsible for daily operations and the supervisory board for monitoring and oversight.

Worker Representation

The action of having employees or their delegates participate in decision-making processes within the workplace or organizational governance.

Scope of Authority

Describes the range or extent of power and responsibilities that an individual or entity is legally allowed to exercise.

Union Federations

Associations of unions that represent the collective interests of workers across various sectors and industries at national or regional levels.