b.

c.

d.

You want to estimate the value per share of a corporation using a DCF approach and the following data: Debt: $50 million; Cash: $40 million; Shares Outstanding: 30 million; the year 1 FCF is expected to be $10 million and it is expected to grow at the rate of 10% until year 3 (so two years of 10% growth) and then to decrease at a rate of 5% for two more years and grow at 3% after year 5. If the discount rate is 9%, what is the price per share today? 4.83 5.16 5.48 6.23 None of the above Suppose you have multiple loans outstanding and you are deciding which to pay off first. To save money you should first pay the loan with the: the highest annual percentage rate the lowest effective annual rate the lowest number of compounding periods per year the highest effective annual rate None of the above It is widely reported on the Internet that the island of Manhattan was purchased in the 17th century for a price of 60 Dutch guilders-roughly equal to $24 (US). Suppose that instead of purchasing Manhattan, the Dutch colonists had invested their $24 (US) in Europe at an average rate of 4.5% per year. If the $24 USD had been invested for exactly 385 years earning simple interest (i.e., without compounding), approximately how much would their investment now be worth? $440 $549,519,444 $9,240 $24,736,768 None of the above Which of the following statements is FALSE? Corporations are assumed to have perpetual lives and partnerships have limited lives. Shareholders have unlimited liability for the obligations of the corporation which represents an important legal risk that equity investors must consider. Double taxation of income is a disadvantage of the corporate form of business organization. Ownership in a corporation is represented by equity shares and this implies that ownership can readily be transferred from one person to another. None of the above