21. Based on the information in Q 20 above, what is the firms free cash flow?

A. $25 B. $40

C. $ 0 D. $20

22. Which of the following would not be used as a summary performance measure when using market multiples to determine value?

A) Stock price

B) Net operating assets

C) Net operating profit after tax

D) Book value

23. Which of the following is an inconsistency of using market multiples to determine value?

A) Using a market multiple assumes that the target company is correctly priced, while comparable companies are mispriced.

B) Using a market multiple assumes that the target company is mispriced, while comparable companies are correctly priced.

C) Using a market multiple assumes that all companies are mispriced.

D) Using a market multiple assumes that the target company can be fully described by its summary performance measure.

24. Foraker Products is a manufacturer and distributor numerous food products. The company recently reported earnings per share of $5.90. Based on its recent price of $110.48, the company has a PE ratio of 18.72542373. Foraker Products is part of the food processing industry which has an industry PE ratio of 19.75.

Using industry information, estimate the intrinsic value of Foraker Products earnings per share?

A) $ 5.90

B) $ 62.68

C) $104.75

D) $116.53

25. Fergeson Learning is a retailer focused on education supplies. The company recently reported earnings per share of $3.93. Based on its recent price of $44.78 the company has a PE ratio of 11.39. The educational supplies industry PE ratio is 19.25.

Assuming that comparable industry companies are priced correctly the intrinsic value of Fergeson Learnings equity per share is:

A) Undervalued by $30.89 per share

B) Overvalued by $3.93 per share

C) Overvalued by $30.89 per share

D) Priced correctly