The Purpose of the Stepping Stone Year Is

question 13

Multiple Choice

The purpose of the stepping stone year is?

• A) to assure that there is sufficient required cash
• B) to assure that future dividends are constant
• C) to assure that investment flows are consistent with terminal growth rates
• D) to allow for a final year of higher-than-sustainable growth

---

Definitions:

Annual Lease

A contract that allows for the rental of a property for a period of one year.

Implicit Costs

The opportunity costs of using resources that a company already owns, essentially the income the company could have earned by using these resources in another way.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as wages and materials.

Nonexpenditure Costs

Costs not directly involving monetary payment but may include time, effort, or loss of opportunity.