An analyst gathered the following information regarding Darius Investments: Current year FCFF = $5.2 million Expected growth rate in FCFF for the next three years = 14% Long-term constant growth rate from Year 4 onward = 6% WACC during the high-growth phase = 18% WACC during the mature phase = 11% The company's excess earnings are closest to:

Select one:

a. $84,810

b. $75,350

c. $81,650

Sharon wants to value the equity of Moon Corporation (MC), a private company, using the GPCM. The stock is currently trading at $45 per share. She gathers the following information regarding comparable public companies in the same industry as MC:

• Average MVIC-EBITDA multiple = 7.2
• An upward adjustment of 30% to the average comparable public company MVIC-EBITDA ratio is required to reflect the relative risk and growth characteristics of MC.
• Based on past acquisitions of public companies in the industry, a 20% premium for control is considered appropriate.

Sharon also obtains the following information regarding MC:

• Normalized EBITDA = $22.50 million
• Market value of debt = $114 million
• Normalized D/E ratio = 0.6

Given that the company has three million common shares outstanding, the stock is most likely:

Select one:

a.

Undervalued.

b.

Fairly valued.

c.

Overvalued.

A company that is in the earliest stages of development should most likely be valued using:

Select one:

a.

The asset-based approach.

b.

The income approach.

c.

The market approach.

Which of the following premia is most likely added to the CAPM to make it more relevant for private company valuation?

Select one:

a.

Premium for systematic risk.

b.

Premium for large size.

c.

Premium for unsystematic risk.

When quantifying the lack of marketability discount, which of the following types of data would result in a marketability discount that is understated?

Select one:

a.

Restricted stock grants.

b.

IPOs.

c.

Put options.

For a large and privately held company, which of the following valuation methods would a private equity manager be unlikely to use?

Select one:

a.

EBITDA multiples

b.

EBIT multiples

c.

Net income multiples