Compute the Value of a Firm with Free Cash Flows

question 79

Multiple Choice

Compute the value of a firm with free cash flows of $9,000, $7,000, and $5,000 over the next three years, a terminal firm value of $30,000 after three years, and the unlevered cost of capital is 10%. Assume that the interest rate tax shield is zero.

• A) $36,109
• B) $37,098
• C) $38,745
• D) $40,263

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Definitions:

Actual Overhead Costs

The real costs incurred for overhead in a specific period, which may differ from budgeted or estimated overhead costs.

Job Costing System

This is an accounting method that tracks the expenses associated with a specific job or project to determine its profitability.

Job Cost Sheet

A document or record that tracks the expenses associated with a specific job or project, including materials, labor, and overhead costs.

Job Cost Sheets

Are documents used in cost accounting to record the materials, labor, and overhead costs associated with a specific job or project.