General Industries Is Expected to Generate the Above Free Cash

question 44

Multiple Choice

General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 9% and General Industries has cash of $15 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price?

• A) $7.78
• B) $8.17
• C) $9.34
• D) $11.67

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Definitions:

Population Variances

A measure of the dispersion or spread of a set of data points within a population.

F-distributed

Pertaining to an F-distribution, used in statistical analysis to compare variances.

Independent Samples

Two or more groups of observations that are collected from different populations and have no relationship with each other.

Population Variances

A measure of the dispersion or spread of a set of data points in a population, indicating how much the data points differ from the population mean.