1. Thunderstruck plans to pay a dividend of $1.28 in the upcoming year. The firm has been increasing

dividends by 2.5% annually and are expected to continue doing the same. If the required return on

investments of this risk level is 9.41%, what is the most you should be willing to pay for a share of

Thunderstruck stock?

a.

$13.62

b.

$1.25

C.

$18.08

d

$18.52

e.

$19.01

2.Which of the following is true with regard to free cash flow (FCF)?

a.

FF is the amount of cash available from operations for distribution to all investors

(including stockholders and debtholders) after making the necessary investments to

support operations.

b.

FF is the amount of cash available from operations for distribution to stockholders after making the necessary investments to support operations.

c.

The amount of FF generated by a firm determines the firm's value.

d.

FF is an estimate of the amount of external funds a firm needs to support ongoing

operations.

e.

Both A and C are true.

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