Id. 554.1201(37)(b) (emphasis added). The first part of the bright-line test is found in the unnumbered paragraph of section 554.1201(37)(b). The second part of the bright-line test contains the four criteria listed in sections 554.1201(37)(b)(1)-(4). Each of the four criteria listed in the second part of the bright-line test are objectively based on economics, not the intent of the parties. U.C.C. 1-201, cmt. 37 (amended 1999), 1 U.L.A. 168 (2004);PSINet, Inc. v. Cisco Sys. Capital Corp.(In re PSINet, Inc.), 271 B.R. 1, 44 (Bankr.S.D.N.Y.2001).

In other words, under the bright-line test, the lease agreement in this case creates a security interest, and cannot be characterized as a lease or a finance lease, if it: (1) prohibits Lake MacBride from terminating the obligation to pay Frontier for the right to possess and use the beverage cart, and (2) meets one of the four independent criteria listed in section 544.1201(37)(b). Iowa Code 554.1201(37)(b)(1)-(4);see alsoPSINet, Inc.,271 B.R. at 43-45(recognizing the presence of any one of the four criteria indicates the lessor did not retain a residual interest in the property and therefore, the lease is not a true lease);Outlook

75

*75Farm Golf Club, LLC,784 N.W.2d at 757-58.

1. Our company (A) is going to buy another company (B). We want to value the shares of

B and, therefore, we will use three alternatives of the structure Debt/Shareholders'

Equity so as to obtain the WACC: 1) present structure of A; 2) present structure of B,

and 3) structure used by A to finance the acquisition of B's shares. We will value the

company B by applying these three alternatives and then take as a reference the

average of the results. Is this correct?

2. When valuing the shares of my company, I calculate the present value of the expected

cash flows to shareholders and I add to the result obtained cash holdings and liquid

investments. Is that correct?

3. I think the Free Cash Flow (FCF) can be obtained from the Equity Cash Flow (CFac) by

using the relation: FCF = CFac + Interests - D. Is this true?

4. Is the relation between capitalization and book value of shares a good guide to

investments?

5. Does it make any sense to form a portfolio comprised of companies with a higher

return per dividend?

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?8190