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Question 3 An analyst has forecast a levered firm's equity free cash flow (EFCF, which equals firm free Not yet saved cash flow including interest
Question 3 An analyst has forecast a levered firm's equity free cash flow (EFCF, which equals firm free Not yet saved cash flow including interest tax shields less debt cash flows), and discounts them to the Marked out of present (time zero) by the required return on equity. 3.00 Let this value be X. What steps up are left to convert this into a share price? Remove flag Select one: a. SharePrice =X/ numShares b. SharePrice =(X+ InterestBearingDebt )/ numshares c. SharePrice =(X InterestBearingDebt )/ numshares d. SharePrice =(X+ Cash InterestBearingDebt )/ numShares e. SharePrice =(X Cash + InterestBearingDebt )/ numshares Question 4 You value a stock using a discounted cash flow (DCF) spreadsheet model based on a 5 year Not yet saved horizon of forecast operating free cash flows and a perpetuity terminal value. \begin{tabular}{l|l} Marked out of \\ 3.00 & Your initial model-estimated share price is very low, less than one hundredth of the traded \end{tabular} market price. You believe that the model's formulas are correct, but some inputs might be too pessimistic. Which of the following adjustments is likely to increase your modelestimated share price? Select one: a. Higher risk free rate. b. Higher market risk premium (MRP). c. Higher equity CAPM beta. d. Higher perpetuity terminal growth rate (TGR)
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