# Suppose leonard, nixon, & shull corporation’s projected free cash

Question 1

Suppose Leonard, Nixon, & Shull Corporation’s projected free cash flow for next year is \$100,000, and FCF is expected to grow at a constant rate of 6%. If the company’s weighted average cost of capital is 11%, what is the value of its operations?

O \$1,714,750

O \$1,805,000

O \$1,900,000

O \$2,000,000

O \$2,100,000

Question 2

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

O Abnormally high executive compensation.

O Targeted share repurchases.

O Shareholder rights provisions.

O Restricted voting rights.

O Poison pills.

Question 3

Suppose Yon Sun Corporation’s free cash flow during the just-ended year (t = 0) was \$100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm’s value of operations, in millions?

O \$948

O \$998

O \$1,050

O \$1,103

O \$1,158

Question 4

Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -\$10 million, but its FCF at t = 2 will be \$20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm’s value of operations, in millions?

O \$158

O \$167

O \$175

O \$184

O \$193

Question 5

Based on the corporate valuation model, the value of a company’s operations is \$900 million. Its balance sheet shows \$70 million in accounts receivable, \$50 million in inventory, \$30 million in short-term investments that are unrelated to operations, \$20 million in accounts payable, \$110 million in notes payable, \$90 million in long-term debt, \$20 million in preferred stock, \$140 million in retained earnings, and \$280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stock’s price per share?

O \$23.00

O \$25.56

O \$28.40

O \$31.24

O \$34.36

Question 6

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

O To increase worker productivity.

O To enable the firm to borrow at a below-market interest rate.

O To make it easier to grant stock options to employees.

O To help prevent a hostile takeover.

O To help retain valued employees.

Question 7

Simonyan Inc. forecasts a free cash flow of \$40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?

O \$840

O \$882

O \$926

O \$972

O \$1,021

Question 8

Which of the following does NOT always increase a company’s market value?

O Increasing the expected growth rate of sales.

O Increasing the expected operating profitability (NOPAT/Sales).

O Decreasing the capital requirements (Capital/Sales).

O Decreasing the weighted average cost of capital.

O Increasing the expected rate of return on invested capital.

Question 9

Vasudevan Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 13% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions?

Year:                              1                                   2                           3

Free cash flow:             -\$20                               \$42                        \$45

O \$586

O \$617

O \$648

O \$680

O \$714

Question 10

Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).

Year:                           1                           2

Free cash flow:          -\$50                      \$100

O \$1,456

O \$1,529

O \$1,606

O \$1,686

O \$1,770

Question 11

Based on the corporate valuation model, Hunsader’s value of operations is \$300 million. The balance sheet shows \$20 million of short-term investments that are unrelated to operations, \$50 million of accounts payable, \$90 million of notes payable, \$30 million of long-term debt, \$40 million of preferred stock, and \$100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?

O \$13.72

O \$14.44

O \$15.20

O \$16.00

O \$16.80

Question 12

Based on the corporate valuation model, Bernile Inc.’s value of operations is \$750 million. Its balance sheet shows \$50 million of short-term investments that are unrelated to operations, \$100 million of accounts payable, \$100 million of notes payable, \$200 million of long-term debt, \$40 million of common stock (par plus paid-in-capital), and \$160 million of retained earnings. What is the best estimate for the firm’s value of equity, in millions?

O \$429

O \$451

O \$475

O \$500

O \$525

Question 13

Akyol Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be \$50 million in Year 5, i.e., FCF at t = 5 equals \$50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?

O \$719

O \$757

O \$797

O \$839

O \$883

Question 14

Which of the following statements is NOT CORRECT?

O The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.

O The corporate valuation model discounts free cash flows by the required return on equity.

O The corporate valuation model can be used to find the value of a division.

O An important step in applying the corporate valuation model is forecasting the firm’s pro forma financial statements.

O Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

Question 15

A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?

Year:                        1                      2                                    3

Free cash flow:        -\$15                 \$10                                  \$40

O \$315

O \$331

O\$348

O \$367

O \$386

Get 20% Discount on This Paper
Pages (550 words)
Approximate price: -

Try it now!

## Get 20% Discount on This Paper

We'll send you the first draft for approval by at
Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

Custom Writings Help is a Quality-Oriented Company in Online Writing as a result of hiring exceptional professionals to execute clients' tasks.

## Research Papers

At Custom Writings Help,We understand the struggle of research paper writing, and that is why at Custom WritingS Help, we are all out to help you. We pride ourselves on having a team of clinical writers. The stringent and rigorous vetting process ensures that only the 'BEST' Writers are chosen for the job. We have highly qualified Ph.D. and MA writers working with us; we equally offer these experienced writers specific bonuses and incentives to make them deliver highly original, unique, and informative content at reasonably low prices.

Thesis Writing Service

Worlwide, Many Masters Students are struggling with Thesis Completion. A thesis is likely to be the longest and most challenging piece of work a student has ever completed. However, unlike essays and other assignments, a student can pick a particular interest topic and work on their initiative. Fortunately, we are there for you. At Custom Writings Help, you are assured of an authentic, imaginative, informative, linguistically great, and advantageous thesis that adheres to all your needs. So, why continue considering different writers when you have discovered the best in the field?

Custom Papers

Not a single student can avoid writing custom papers. However, a total lack of experience, skills, and time makes it very hard to produce a superb writing piece. Therefore, if you are seeking professional help, turn to us. Our specialized and experienced writers compose a variety of model papers, including custom essays, college term papers, research papers, book reports, MBA essays, executive summaries, dissertations, Ph.D. theses, admission essays, and research proposals for college and university students at any level.

Essay Writing

Most of the students disregard the critical principles of essay writing and compose papers below sensible guidelines. Therefore, with Custom Writings Help, one should not worry about his/her essay. Our Writers compose informative and engaging content on all complexities and topics. We write meaningful and smart essays while prioritizing all aspects that bring about a good grade, such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines.

Coourse Work Writing

Don't let the seemingly never-ending onslaught of writing assignments get you down. If you are looking where to get course work assistance online, the writers at Custom Writings Help are here to assist you with all of your writing needs. We undertake to unique delivery of papers that meet the professor's requirements. The content is proofread, edited, and checked plagiarism before submission to customers. No matter how big or small your work is, we will deliver on time. Try US Now! !

Dissertation Writing Service

High-Quality Dissertation Writing Services are rare. They require Ph.D. academicians – not easily found. However, are an exception. The years, time, and resources we have invested in the dissertation world has given us a competitive advantage over others. Choose to come to Custom Writings Help; You will find perfect Ph.D. consultants who have written hundreds of dissertations theses ready to help you. Let our dissertation-writing services help you craft your dissertation, for you are assured we will give you the results.