Question
Assume the following for Company C: Revenue growth=5%, CF 0 =5,000, Cash flow growth=2%, NI 0 =6,000, Net Income growth=3%, Discount Rate(WACC)=10%, and COE=14%. Also,
Assume the following for Company C: Revenue growth=5%, CF0=5,000, Cash flow growth=2%, NI0=6,000, Net Income growth=3%, Discount Rate(WACC)=10%, and COE=14%. Also, CF=Cash Flow, Cash Flow is assumed to be unleveraged, WACC=Weighted Average Cost of Capital, COE=Cost of Equity, and NI=Net Income. Using only the data provided and the Gordon Growth model, what is the indicated value of the total enterprise of Company C?
| A. | 63,750 | |
| B. | 56,182 | |
| C. | 62,500 | |
| D. | 50,000 |
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Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
8th edition
1111534918, 978-1111534912
