You observe that a firm has forecast a free cash flow of $160 in year 3. The free cash flows are expected to grow at 3.5% per year thereafter. If the weighted average cost of capital is 9%, what is the approximate horizontal value (terminal value)?

Select one:

a. $2,080

b. $3,011

c. $3,312

d. $2,681

2.

Which of the following statements regarding goodwill is true?

I It is amortized for shareholder reporting.

II It is created by the acquiring firm paying more than the current value for a target firm.

III It is subject to the impairment test for tax purposes.

IV It is recorded on the books of the merged or acquiring firm.

Select one:

a. I, II, and III only

b. II, III, and IV only

c. I, II, and IV only

d. I, III, and IV only