1) Sustainable growth under the free cash flow to equity model is calculated as __________.

a.dividend divided by stock price

b.net income * return on equity

c.None of the other answers is correct

d.equity reinvestment rate * return on equity

e.plowback ratio * return on equity

2) Holiday, Inc. had a net income of $10 million with net capital expenditures of $4 million and an increase in non-cash working capital of $2 million. If its equity to capital ratio is 50%, then its equity reinvestment rate is _________.

a.60%

b.30%

c.40%

d.None of the other answers is correct

e.

20%

3) Free cash flow to equity (FCFE) may be viewed as _______ and may be used to value a company when _______.

a.residual income; the company pays a small dividend

b.a company's total free cash; the company pays no dividend

c.None of the other answers is correct

d.a company's potential dividends to common equityholders; the company pays no dividend

e.dividend to common; the company pays a relatively small dividend