1. General Static Co. generated $2.80 billion in Free Cash Flow last year and reported Net Income equal to $2.25 billion. Both Net income and Free Cash Flow are expected to grow at 6% rate forever. The required return on equity is 12% and the WACC is 9%. The Enterprise Value is closes to:
a) $79 billion
b) $88 billion
c) $93 billion
d) $99 billion
e) $105 Billion
2. Which of the following items is NOT included in free cash flow?
a) Operating Income
b) Interest expense
c) Capital expenditures
d) Net working capital investments
e) All of the above are included in free cash flow
3. The excess return is the ________.
a) rate of return that can be earned with certainty
b) rate of return in excess of the Treasury-bill rate
c) risk adjusted return
d) index adjusted return