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Question;131. In;the Gordon model, the value of the common stock is the;A) net value of all assets which are;liquidated for their exact accounting value.;B) actual amount each common stockholder;would expect to receive if the firm's assets are sold, creditors and preferred;stockholders are repaid, and any remaining money is divided among the common;stockholders.;C) present value of a non-growing;dividend stream.;D) present value of a constant, growing;dividend stream.;132. Emmy;Lou, Inc. has an expected dividend next year of $5.60 per share, a growth rate;of dividends of 10 percent, and a required return of 20 percent. The value of a;share of Emmy Lou, Inc.'s common stock is ________.;A) $28.00;B) $56.00;C) $22.40;D) $18.67;133. A firm has experienced a constant annual rate of;dividend growth of 9 percent on its common stock and expects the dividend per;share in the coming year to be $2.70. The firm can earn 12 percent on similar;risk involvements. The value of the firm's common stock is ________.;A) $22.50/share;B) $9/share;C) $90/share;D) $30/share;134. A common stock currently has a beta of 1.3, the;risk-free;rate is an annual rate of 6 percent, and the market return is an annual rate of;12 percent. The stock is expected to generate a constant dividend of $5.20 per;share. A toxic spill results in a lawsuit and potential fines, and the beta of;the stock jumps to 1.6. The new equilibrium price of the stock;A) will be $37.68.;B) will be $43.33.;C) will be $33.33.;D) cannot be determined from the;information given.;135. Nico Corporation's common stock currently;sells for $180 per share. Nico just paid a dividend of $10.18 and;dividends are expected to grow at a constant rate of 6 percent forever. If the required;rate of return is 12 percent, what will Nico Corporation's stock sell;for one year from now?;A) $190.80;B) $187.04;C) $195.40;D) $179.84;136. Tangshan China Company's stock is currently selling;for $80.00 per share. The expected dividend one year from now is $4.00 and the;required return is 13 percent. What is Tangshan's dividend growth rate assuming;that dividends are expected to grow at a constant rate forever?;A) 8%;B) 9%;C) 10%;D) 11%;137. Tangshan China's stock is currently selling for;$160.00 per share and the firm's dividends are expected to grow at 5 percent;indefinitely. Assuming Tangshan China's most recent dividend was $5.50, what is;the required rate of return on Tangshan's stock?;A) 7.3%;B) 8.6%;C) 9.5%;D) 10.6%;138. ________ is the actual amount each common;stockholder would expect to receive if the firm's assets are sold, creditors;and preferred stockholders are repaid, and any remaining money is divided among;the common stockholders.;A) Liquidation value;B) Book value;C) The P/E multiple;D) The present value of the dividends;139. ________ is a guide to the firm's value if it is;assumed that investors value the earnings of a given firm in the same way they;do the average firm in the industry.;A) Liquidation value;B) Book value;C) The P/E multiple;D) The present value of the dividends;140. Which of the following valuation methods is;superior to the others in the list since it considers expected earnings?;A) liquidation value;B) book value;C) P/E multiple;D) present value of the interest;141. The use of the ________ is especially helpful in;valuing firms that are not publicly traded.;A) liquidation value;B) book value;C) P/E multiple;D) present value of the dividends;142. The current price of DEF Corporation stock is;$26.50 per share. Earnings next year should be $2 per share and it should pay a;$1 dividend. The P/E multiple is 15 times on average. What price would you;expect for DEF's stock in the future?;A) $13.50;B) $15.00;C) $26.50;D) $30.00;143. Nico Corporation expects to generate free-cash;flows of $200,000 per year for the next five years. Beyond that time, free cash;flows are expected to grow at a constant rate of 5 percent per year forever. If;the firm's average cost of capital is 15 percent, the market value of the;firm's debt is $500,000, and Nico has a half million shares of stock;outstanding, what is the value of Nico's stock?;A) $2..43;B) $3.43;C) $1.43;D) $0.00;144. Karina's Caribbean Foods had total assets as;recorded on its balance sheet are $1,500,000. What is the value of the Karina's;common stock if it has $950,000 in liabilities, and 7,500 shares of common;stock outstanding?;145. Scooter World has estimated the market value of its;assets to be $1,250,000. What is the value of Scooter Wrold's common;stock if it has $900,000 in liabilities, $50,000 in preferred stock, and 7,500;shares of common stock outstanding?;146. Tangshan Antiques has a beta of 1.40, the annual;risk-free;rate of interest is currently percent, and the required return on the market portfolio;is 16 percent. The firm estimates that its future dividends will continue to;increase;at an annual compound rate consistent;with that experienced over the 2000-2003 period.;(a) Estimate;the value of Tangshan Antiques stock.;(b) A;lawsuit has been filed against the company by a competitor, and the potential;loss has increased risk, which is reflected in the company's beta, increasing;it to 1.6. What is the estimated price of the stock following the filing of;the lawsuit.;147. The capital budgeting process consists of five;distinct but interrelated steps: proposal generation, review and analysis;decision making, implementation, and follow-up.;148. The capital budgeting process consists of four;distinct but interrelated steps: proposal generation, review and analysis;decision making, and termination.;149. Independent projects are projects that compete with;one another for the firm's resources, so that the acceptance of one eliminates;the others from further consideration.;150. A non-conventional cash flow pattern associated with capital;investment projects consists of an initial outflow followed by a series of;inflows.

 

Paper#50974 | Written in 18-Jul-2015

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