Which of the following would likely increase the terminal value of a company?

The terminal value of a company represents the present value of its future cash flows beyond a specific forecast period. A key factor in calculating this value is the discount rate, which often reflects risk-free rates such as T-bill rates. When T-bill rates decrease, the discount rate used in present value calculations also tends to decline. This allows future cash flows to be discounted less aggressively, thereby increasing their present value. As a result, a decrease in T-bill rates can lead to a higher terminal value for a company, signifying enhanced attractiveness for investors.

The other options present scenarios that generally would not contribute positively to a company's terminal value. Increased competition often puts pressure on profitability, which can negatively impact cash flows. Higher tax rates can reduce net earnings and cash available for distribution. Reduced consumer demand can lead to lower sales and, consequently, decreased cash flows, negatively affecting the company's valuation.