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Question
If a company's free cash flows are expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.a. The company's stock's dividend yield is 5%.
b. The value of operations is expected to decline in the future.
c. The company's WACC must be equal to or less than 5%.
d. The company's value of operations one year from now is expected to be 5% above the current price.
e. The expected return on the company's stock is 5% a year.
Answer
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