13. You have been asked to estimate the cost of equity for Holton Holdings, a firm with operations in three different businesses - retailing hotels and trave. You have collected information on the firm's operations and of comparable firms in each of the businesses. Holton Holdings has a debt of $ 1 billion and the corporate tax rate is 28% Comparable firms Revenues Unlevered Beta Retailing $ 400 million 0.85 Software $ 400 million 1.15 Travel $ 800 million 1.35 a. Estimate the bottom-up unlevered beta for Holton Holdings. b. Estimate the bottom-up levered beta for Holton Holdings 14. The following was the result of a regression of P/E ratios on growth rates, betas, and payout ratios, for stocks listed on the S&P 500 in April 2018: P/E= 18.69 + 0.0695 GROWTH +0.5082 BETA -0.4262 Emerging country dummy which of the independent variables has the sign different from the one expected? Select one: No one b. Beta C. Emerging market dummy d. Growth a. 15. Which of the following calculations of the FCFF are correct? A. FCFF = Net income + interest (1-t) + Depreciation - Capital Spending -D working Capital B. FCFF = (Earnings before taxes + interest Expenses) (1 - tax rate) + Depreciation - Capital Spending - DWorking Capital C. FCFF = EBIT (1-tax rate) + Depreciation - Capital Spending - Dworking Capital D. FCFF = (EBITDA - Depreciation) (1 - tax rate) + Depreciation - Capital Spending - Dworking Capital E. FCFF = FCFE + interest Expenses (1 - tax rate) - New Debt issues + Principal Repayments Select one: a. C only b. B and E only c. A and B only d. All e. D and E only 16. If you are picking an undervalued stock using price to book ratios, you would want to pick a stock with A. Low price to book ratio, high ROE, high risk and high growth B. Low price to book ratio, low ROE, low risk and high growth C. Low price to book ration, High ROE, Low risk and high growth D. Low price to book ration, high ROE, low risk and low growth E. High price to book ratio, high ROE, low risk and high growth Select one: a. C b. E c. d. B e. D