Estimate a Venture's Terminal Value Based on the Following Information

question 30

Multiple Choice

Estimate a venture's terminal value based on the following information: current year's net income = $20,000; next year's expected cash flow = $26,000; constant future growth rate = 7%; and venture investors' required rate of return = 20%.

• A) $156,846
• B) $285,714
• C) $200,000
• D) $150,000
• E) $428,571

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Definitions:

Personality

The combination of characteristics or qualities that form an individual's distinctive character, affecting how they think, feel, and behave across various situations.

Situationist

Pertaining to the theory that environmental and situational contexts significantly influence behavior, as opposed to traits being solely responsible.

Correlation

A statistical measure that indicates the extent to which two variables fluctuate together, without implying causation.

Effect Size

A quantitative measure of the magnitude of a phenomenon, effect, or difference, used to understand the significance of research outcomes.