You Are Using the FCFF Approach to Value a Business

question 84

Multiple Choice

You are using the FCFF approach to value a business. The estimated FCFF for next year will be $13.6 million, and it will increase at a rate of 6 percent for each of the following five years. After that point, the FCFF will increase at a rate of 3 percent forever. If the WACC for this firm is 8 percent, what is it worth? (Round final answer to the nearest million.)

• A) $301 million
• B) $354 million
• C) $241 million
• D) $144 million

Understand the concept and implications of per capita income disparities among countries, including factors influencing these disparities.

Analyze the relationship between economic policies and practices on global income distribution and poverty alleviation.

Appreciate the potential of microcredit programs in enhancing the economic empowerment of the poor in DVCs.

Know the characteristics and differing income levels between IACs and DVCs, and the implications for economic policy and development.

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Definitions:

Genetic Variation

The natural differences in genes among individuals of a species.

Racial Categories

Classifications of humans based on shared physical or social qualities into groups generally viewed as distinct within a given society.

Arbitrary Manner

A way of deciding or acting that is not based on system or plan, but instead on random choice or personal whim.

Malay

Pertains to a major ethnic group within Southeast Asia, primarily found in Malaysia, Indonesia, Singapore, Brunei, and Thailand, or the Austronesian language spoken by them.