Consider the following table of Actual earnings: Actual earnings Firm A $ 6,000 10% $100,000 Firm B $ 14,000 8% $150,000 Firm C $ 18,000 12% $190,000 r BVt-1 Assume that Firm A can increase earnings $4,000 by cutting costs. Abnormal earnings would be: Multiple Choice O $1.000 $0 O O O $1,500 O O $(1,000) In the flows to equity model of valuation, and using simplifying assumptions, the current stock price estimate can be expressed as a capitalization rate (1 x r) multiplied by a perpetuity equal to cash flow after paying debtholders and preferred shareholders. True or False True False