USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 11

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You are using the free cash flow to equity (FCFE) technique to analyze the U.S. equity market. The beginning FCFE is $90, and the required rate of return is 10 percent. Free cash flows are expected to grow at a 10 percent rate for the next two years and then grow at a constant rate of 7 percent forever.
-Refer to Exhibit 9.7. What will FCFE be three years from now?

• A) 108.90
• B) 116.52
• C) 117.00
• D) 119.79
• E) 120.21

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Definitions:

Coefficient of Determination

A statistical measure that calculates the proportion of variance in the dependent variable predictable from the independent variable(s).

Regression Plane

A three-dimensional plane that best fits a set of points in a multiple regression model, used for prediction.

Independent Variables

Variables in an experiment or statistical model that are manipulated or changed to determine their effects on dependent variables.

Unadjusted Coefficient

A coefficient in a statistical model that has not been modified to account for potential confounding variables.