The three-stage FCFE model might result in an extremely high value if: A)
the growth rate in the stable-period is too low. B)
the growth rate in the stable-period is too high. C)
the growth rate in the stable-period is equal to that of GNP. The correct answer is B. However, during high growth periods, FC and WC investments will be higher and thereby FCFE model will provide a low value due to these deductions. In that case, the answer should be A. Can somebody please explain where I am thinking wrong, Thanks in advance.