13. How will be the comp value estimated by DFC affected if the expected inventory turnover (ITO) decreased from 150 to 100days? The rest of assumptions remain unchanged (ceteris paribus)?

A.decrease B. Increase C. Unchanged D. More info needed

15. A company with 0 net debt has sales of 10m, EBIT of 2m And net income of 1.8m. Harmonic mean of comparable companies multiples is 1 for EV/Sales, 5 for EV/EBIT and 10 for P/E. What can be the explanations to the high P/E ratio of the peers?

A. Comparable companies face low corporate income tax rates.

B. are more leveraged

C.have lower growth prospects

D. ALL

16. Given the following info compute the cost of equity for a company: US treasury 20 year yield to maturity 4%. Specific company risk premium 1% book value of equity, $225000000 common shares outstanding 50000000price per share $7, equity risk premium 5%, beta 1.2, size premium in excess of CAPM (market cap < $453254000) 4%.

A.15% B.15.5% C.16% D.NONE

17. EV/SALES multiple preferred to value a company if:

A.operating margin of comparable companies arent similar

B. profitability of company is significantly higher than its peers

C. profitability of company is significantly higher than its peers.

D. company has negative profitability.

18. If the estimated market value of equity of the company is 55m, its net debt is 21m, excess cash of 5m and EBIT amounts to 120m, What is the implied EV/EBIT multiple closest to?

A.0.25 B.0.67 C.0.63 D. None of them

19. sunflower international is operating in a country that has over the past year gone through a phase of significant deflation. If you were comparing the real and nominal return on invested cap ROIC you would expect that:

A. Real ROIC and nominal would equal B. real ROIC > nominal ROIC C, real ROIC < nominal ROIC D. cant compare

20. Determine the appropriate level of working capital for a firm requires:

A. Evaluating risk associated with various levels of fixed assets and types of debt used to finance these assets

B. Changing the capital structure and dividend policy of the firm

C. Maintaining short term debt at the lowest possible level because its generally non expensive than long term debt

D. offsetting the benefit of current assets and current liabilities against the probability of technical insolvency

22. Why would it be incorrect to define a profitability ratio as earnings divide invested cap (NI/IC)

a. Taxes would not be treated correctly

b. Earnings should be measured on per-share basis

c.there is a mismatch between capital

d.earnings include return available

23. next year free cash flow to the firm of a computer is forecast to 40 m while free cash flow to equity is forecast to 16 m. if the market value of debt is 200 m, estimated future growth of both FCFF and FCFE 2%, WACC 12% and cost of equity 18%, what is the difference in the value of company estimated using FCFF and FCFE?

A.300m b.0m c.100m d.none