The Terminal Value of a Firm Is Based on Which

question 3

Multiple Choice

The terminal value of a firm is based on which one of these assumptions?

• A)The growth rate of the future cash flows will exceed the firm's WACC.
• B)All future cash flows will be constant.
• C)The cash flows after Time T will diminish on an annual basis.
• D)The cash flows will increase in the future at a constant perpetual rate.
• E)The firm will be sold at Time T for the stated terminal value.

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Definitions:

Psychological

Pertaining to the mind or mental processes, involving aspects of cognitive, emotional, and social behavior and functions.

Personality Problems

Difficulties in the enduring pattern of thinking, feeling, and behaving that significantly deviate from the expectations of one's culture, causing distress or impaired functioning.

Problem Solving

Process of cognition that occurs when a goal must be reached by thinking and behaving in certain ways.

Solution

A means of solving a problem or dealing with a difficult situation, or a homogeneous mixture of two or more substances.