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NEW QUESTION: 1
Determine the enterprise value of a firm whose expected operating free cash flows are $100 each year and are growing with GDP at 2.5%. Assume its weighted average cost of capital is 7.5% annually.
A. $4,000
B. $1,000
C. $2,000
D. $1,333
Answer: C
Explanation:
Explanation
The operating free cash flows can be considered a perpetual annuity with a given growth rate.
The value of a perpetuity of a periodic cash flow of 'c', with a discount rate 'r' and growth rate 'g' is given by c/(r - g). In the given case, the company can be considered as providing a perpetual annuity which provides an annual cash flow of $100 which are growing at 2.5% (equal to the GDP's growth rate, as given), and whose cost of capital, or the discount rate to use, is 7.5% Therefore the value of the firm in this case is given by $100/(7.5% - 2.5%) = $2,000. Recall that the value of the firm is equal to the Operating Free Cash Flow/Weighted Average Cost of Capital (OFCF/WACC).
Therefore Choice 'd' is the correct answer.

NEW QUESTION: 2
Which guiding principle recommends using the minimum number of steps necessary to achieve an objective?
A. Progress iteratively with feedback
B. Think and work holistically
C. Focus on value
D. Keep it simple and practical
Answer: D

NEW QUESTION: 3
What are requirements for VoWLAN?
A. 20% overlapping cells
B. SNR 25
C. RSSI -67
D. SNR 40
Answer: A
Explanation:
Explanation/Reference:
Explanation: