Exhibit 13.4 Use the Information Below for the Following Problem(S)

Exhibit 13.4
Use the Information Below for the Following Problem(S)
The Furniture Manufacturing Industry had free cash flow to equity (FCFE) of $63 for the most recent year ending reported yesterday. The industry is in the mature stage and anticipates a growth rate of 4% indefinitely. The required rate of return is 11% for this industry.
-Refer to Exhibit 13.4.Suppose unexpected inflation suddenly increases by 2 percent and there are no other changes in expectations.What will be the new intrinsic value of the Furniture Manufacturing Industry today?

A) $700
B) $728
C) $989
D) $1,260
E) $1,310