Simpltar Co

question 14

Multiple Choice

Simpltar Co. is expected to grow rapidly in the next three years and then have no growth for the foreseeable future. The firm expects free cash flows of $9.1 million, $11.4 million, and $17.7 million over the next three years, and thereafter its cash flows will stay constant. The company has no nonoperating assets. If the appropriate WACC is 12 percent and debt of 44.5 million, what is the equity value of this business? (Round final answer to the nearest million.)

• A) $135 million
• B) $105 million
• C) $45 million
• D) $90 million

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Popular Sovereignty

The principle that the authority of a state and its government is created and sustained by the consent of its people, through their elected representatives, who are the source of all political power.

Adam Smith

A Scottish economist and philosopher, best known for his works "The Wealth of Nations," which laid the foundations for classical economics.

The Wealth of Nations

A seminal book by Adam Smith that laid the foundations of classical economics, emphasizing free markets, the division of labor, and the function of self-interest in commerce.

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An economic system where transactions are under the control of private owners for profit rather than by the state.