Hello tutors answer the questions below based on the following case study.

The data collected by the other four case studies from this series was also reviewed for both

triangulation purposes and to fill in gaps or add more information from the sectors. Although a

good number of interviews were carried out across the targeted samples, this is not, nor could

be, fully comprehensive. In addition to the interviews, secondary research was carried out to

identify funding channels and trends. The study did collect sufficient data from enough of the

key funders and implementers of humanitarian innovation to be able to make a complete map

of humanitarian innovation financing. Although the researchers could not access information

on all the funding of humanitarian innovation, it did uncover enough information to be able to

estimate the value of financing being directed explicitly at innovation by the key donors.

1. Assuming a company wishes to distribute money to its shareholders, is it better to

distribute dividends or to repurchase shares?

2. Is the price of futures the best estimate of the /$ exchange rate?

3. How could we obtain an indisputable discount rate? How should we calculate the beta

and the risk premium?

4. My company paid an extremely high price for the acquisition of another company; the

price was recommended by the valuation of an investment bank. We now have

financial problems. Is there any way to make that bank legally responsible for this

situation?

5. Which currency has to be used in an international acquisition in order to calculate the

flows?

6. A financial consultant is valuing the company I set as an objective (an entertainment centre) by discounting the cash flows until the end of the dealership at 7.26% (interest rate on 30-year-bonds = 5.1%; market premium = 5%, and Beta = 0.47%). 0.47 is a beta provided by Bloomberg for Kinepolis (the company whose activity is the management of several cinemas in the EU), in function of the Dax Index. Is it correct to use the beta of Kinepolis in this valuation?

7. I am confused because I see different formulae to lever and unlever betas in different books (Damodaran, McKinsey, Brealey & Myers ...). Which is the correct one? IESE Business School-University of Navarra - 7

8. An investment bank affirms that the VTS (Value of Tax Shields) of my company is equal to each year's VTS using the WACC as a discount rate. I told them that I have never seen such a calculation of the VTS but they answered that it was a habitual practice. Is that true?

9. I have two valuations of the company we set as an objective. In one of them, the present value of tax shields (D Kd T) was calculated using Ku (required return to unlevered equity) and, in the other one, using Kd (required return to debt). The second valuation is a lot higher than the first one, but which of the two is better?

10. My investment bank told me that the beta provided by Bloomberg incorporates the illiquidity risk and the small cap premium because Bloomberg does the so-called Bloomberg adjustment formula. Is that true?