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You’ve just done some analysis on a publicly traded company and some of your key findings are below. The company;  Operates in a highly innovative and high growth industry which is expected to continue for the next 5 years before the industry matures The company is an industry leader with some of the best metrics relative to peers Has an ROE of 25% Operates in a world where long term GDP is approximately 4% Does not pay a dividend Given these considerations, what is the most appropriate sustainable growth rate (terminal value growth rate) to use for this company?

A company has a dividend payout ratio of 35%. The most recent free cash flow was $2.15. Assuming free cash flows are expected to grow at 20% for the next 3 years before dropping to a long-term growth rate, what is the overall value of the firm? The discount rate for the firm is 15%.

A firm’s CFO wants to estimate the firm’s WACC, and has compiled the following information below. The firm uses CAPM to estimate the cost of equity, and does not account for any kind of floatation costs in the calculation of the cost of capital. What is the firm’s WACC? Capital structure 45% equity Bonds outstanding yield 7.75% Real-risk free rate 3% Market risk premium 7% Beta 1.2 Tax rate 30%

Assuming the company has a dividend payout ratio of 35% of earnings and the long term expected growth rate for dividends is 5%, what is the current value of the firm considering a discount rate of 12%?

Use the following information for questions 18 through 20 Supplemental Info Gross Margin 65% Tax Rate 35%     Balance Sheet (in millions) Total Assets 475 Shareholders Equity 250     Income Statement (in millions) Sales 175 EBITDA 75 EBIT 60 EBT 58

What is the appropriate valuation technique to use for a company that has not consistently paid dividends but has paid dividend recently, cash flows are related to earnings, and it is in a mature industry?

The PV of a company is $159.68 and has the following expected dividends. The sustainable growth rate (or terminal value growth rate) is 1.5%. What is the discount rate used to calculate the PV of $159.68? Time Period 1 2 3 Dividend 12.25 11.66 13.07

Which of the following statements is true? The larger the current ratio, the less liquid the firm. A current ratio of greater than one indicates net working capital is negative. The larger the debt ratio, the lesser the firm’s ability to pay off long-term debt.

Which Supreme Court case involving Lonnie E. Smith, an African American dentist from Houston, finally did away with discrimination in primary elections?

The “big six” counties in Texas (Harris, Dallas, Tarrant, Bexar, Travis, and El Paso) account for roughly how much of the states total population?