Income Approaches: You Are Using the FCFF Approach to Value

question 14

Multiple Choice

Income approaches: 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?

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

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Definitions:

Siderails

Safety barriers attached to the sides of a bed, particularly hospital beds, to prevent patients from falling out.

Nursing Assistive Personnel

Support staff in the nursing field who assist with basic patient care under the supervision of registered nurses or licensed practical nurses.

Restraints

Devices or methods used to limit the movements of a patient for their own safety or the safety of others.

Applying and Removing

The procedures or techniques for putting on and taking off items or substances, often referring to medical dressings, bandages, or protective gear.