1. Which of the following statements is true?
A) Social Security will provide most individuals with an equal wage replacement percentage during retirement.
B) Because of the high cost, many small businesses are precluded from establishing a retirement plan.
C) The U.S. Government offers many tax incentives to employers who establish and maintain qualified retirement plans.
D) Large employers usually establish defined benefit plans because investment risk is shifted to employees.
2. Market cap of a firm is $2000. It has $400 short-term debt and $500 long-term debt. It has $50 of cash and marketable securities and its operating cash needs are $50. What is the market's estimate of its enterprise value?
3. A firm’s free cash flow next year is expected to be $100 and will remain constant forever. Its WACC is 8%. What is its enterprise value?