DeterminE that Esterlines asset beta is 0.78 and the asset beta for the Avionics and Controls division is 1.40. Say that the Avionics and Controls division represents 1/3 of the firms assets. What is the value of asset beta for the other two divisions combined?

a. 0.74

b. 0.78

c. 0.47

d. 0.43

In business valuation, estimate of a company's value depends partly on the discount rate (k) that is used to discount future cash flows an observation that is apparent in the Shuksan Genome. One way in which k is important is that it is an input in the constant growth model used to compute terminal value, since terminal value = next years free cash flow divided by (k - g). Which of the following is the most accurate statement about the overall impact of k on the company's current value in the Shuksan Genome?

a. An increase in k by 1 percentage point has a larger impact on Shuksans current value than a 1 percentage point decrease in g.

b. An increase in k by 1 percentage point has the same impact on Shuksans current value as a 1 percentage point decrease in g.

c. An increase in k by 1 percentage point has a smaller impact on Shuksans current value than a 1 percentage point decrease in g.

d. The impact on Shuksans current value of an increase in k by 1 percentage point cannot be determined.