1. The following are desirable characteristics of targets:
A. Rapidly growing cash flows and earnings.
B. Low P/E ratios.
C. Market value less than book value
D. All of the above.
2. The discount rate used to discount future cash flows should:
A. Be equal to yield on long-term U.S. Treasuries.
B. Be 2% greater than yield on long-term U.S. Treasuries.
C. Incorporate a risk premium equal to perceived risks and volatility of future cash flow stream.
D. Usually will be 1% greater than yield on high yield bonds.
Assuming the Sales Growth rate for ACME Co., in year 6 is 6% and the NOPAT Margin, and CAPX as a % of Sales percentages are the same as in year 5. The Free Cash Flow in Year 6 is:
3. The Free Cash Flow in Year 6 is:
A. 45.5 million
B. $47.8 million
C. $48.2 million
D. $42.9 million
4. The Total Enterprise Value for Acme Co., is:
A. $804.1 million.
B. $456.3 million.
C. $595.4 million.
D. $495.4 million