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Q1. You work as an equity analyst at Barclay Cap in December 2021. The following monthly returns have been computed by your assistant. 0.05 0.05

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Q1. You work as an equity analyst at Barclay Cap in December 2021. The following monthly returns have been computed by your assistant. 0.05 0.05 0.05 0.05 0.05 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02 -0.02 Using six decimals in your computation, the annualized risk/reward ratio of this stock is approximately: a. 1.135 b. 1.500 c. 2.000 d. Less than 1 Use the following information to answer questions 2-3. Sales $10 million. The EBIT is 50% of sales. Interest and depreciation is 5% and 6% of sales respectively. The increase in working capital is $300,000. Capital expenditures are $200,000. The tax rate is 21%. There are 1 million shares outstanding. The 10 yr T-note is 3%. The GDP growth rate is 4%. The covariance of the stock and the market is 180. The std deviation of the market is 30. The market risk premium is 8%. Q2. Using 4 decimals in your computations, the FCFE per share is approximately: a. $3.25 b. $3.65 c. $3.85 d. $4.20 e. None of the above Q3. The discount rate is a. .0651 b. .0752 c. .0833 d. More than 8.6% e. None of the above Use the following information to answer question 4-6. Assume the expected EPS for next year is $2,going up by 18% for the following five years. Thereafter the growth rate is constant at the annual growth rate of GDP of 4%. The discount rate is 10%. Q4. The PV of EPS in the year four is approximately: a. $1.244 b. $3.244 c. $4.244 d. $2.244 e. None of the above Q5. Based on EPS for stock valuation and 10% as discount rate, the stock price as of today is approximately: a. $66 b. $60 c. $70 d. $75 e. None of the above Q6. With a margin of error of 10% and assuming the stock is trading at $40 per share today, the above stock is recommended for: a. buy b. sell c. no action d. day trading! Q7. Using max. 8 words explain when you use CAPM vs WACC

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