Question 1

poison pill is also known as a corporate restructuring.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

A) $948 
B) $998 
C) $1,050 
D) $1,103 
E) $1,158

Question 3

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

Accepted Answer

A) To increase worker productivity. 
B) To enable the firm to borrow at a below-market interest rate. 
C) To make it easier to grant stock options to employees. 
D) To help prevent a hostile takeover. 
E) To help retain valued employees.

Question 4

Which of the following does NOT always increase a company's market value?

Accepted Answer

A) Increasing the expected growth rate of sales. 
B) Increasing the expected operating profitability (NOPAT/Sales). 
C) Decreasing the capital requirements (Capital/Sales). 
D) Decreasing the weighted average cost of capital. 
E) Increasing the expected rate of return on invested capital.

Exam 13: Valuation, Governanc

poison pill is also known as a corporate restructuring.

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?

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

Which of the following does NOT always increase a company's market value?