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strayer fin534 quiz 7

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Question;Question 1;Last;year Godinho Corp. had $250 million of sales, and it had $75 million of fixed;assets that were being operated at 80% of capacity. In millions, how large could sales have been;if the company had operated at full capacity?;Correct Answer;Question 2;Which;of the following is NOT a key element in strategic planning as it is described;in the text?;Correct Answer:.;Question 3;Spontaneous funds are generally;defined as follows;Correct Answer;Question 4;Which;of the following statements is CORRECT?;Correct Answer:.;Question 5;Which;of the following statements is CORRECT?;Correct Answer:.;Question 6;Which;of the following statements is CORRECT?;Correct Answer;Question 7;The;capital intensity ratio is generally defined as follows;Correct Answer;Question 8;A company;expects sales to increase during the coming year, and it is using the AFN;equation to forecast the additional capital that it must raise. Which of the following conditions would cause;the AFN to increase?;Correct Answer;Question 9;Which;of the following statements is CORRECT?;Correct Answer;Question 10;Which;of the following is NOT one of the steps taken in the financial planning;process?;Correct Answer:.;Question 11;Which;of the following statements is CORRECT?;Correct Answer;Question 12;Which;of the following assumptions is embodied in the AFN equation?;Correct Answer;Question 13;The;term ?additional funds needed (AFN)? is generally defined as follows;Correct Answer;Question 14;Which;of the following statements is CORRECT?;Correct Answer;Question 15;Last;year Handorf-Zhu Inc. had $850 million of sales, and it had $425 million of;fixed assets that were used at only 60% of capacity. What is the maximum sales growth rate the;company could achieve before it had to increase its fixed assets?;Correct Answer;Question 16;Which of the following statements;is NOT;CORRECT?;Correct Answer;Question 17;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?;Answer;Correct Answer;Question 18;Which;of the following is NOT normally regarded as being a good reason to establish;an ESOP?;Correct Answer;Question 19;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?;Correct Answer;Question 20;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;Correct Answer;Question 21;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?;Answer;Correct Answer;Question 22;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;Correct Answer;Question 23;Suppose;Yon Sun Corporation?s free cash flow during the just-ended year (t = 0) was;$100 million, and FCF is expected to grow at a constant rate of 5% in the;future. If the weighted average cost of;capital is 15%, what is the firm?s value of operations, in millions?;Answer;Correct Answer;$;Question 24;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?;Answer;Correct Answer;Question 25;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?;Answer;Correct Answer;Question 26;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?;Answer;Correct Answer;Question 27;Which;of the following does NOT always;increase a company?s market value?;Correct Answer;Question 28;Based;on the corporate valuation model, the value of a company?s operations is $1,200;million. The company?s balance sheet;shows $80 million in accounts receivable, $60 million in inventory, and $100;million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in;accounts payable, $120 million in notes payable, $300 million in long-term;debt, $50 million in preferred stock, $180 million in retained earnings, and;$800 million in total common equity. If;the company has 30 million shares of stock outstanding, what is the best;estimate of the stock?s price per share?;Correct Answer;Question 29;Which;of the following is NOT normally regarded as being;a barrier to hostile takeovers?;Correct Answer:.;Question 30;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?;Correct Answer

 

Paper#49853 | Written in 18-Jul-2015

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