Question 4 (7 marks) A student is conducting an evaluation for a company with the following statements. Answer whether it is TRUE or FALSE for each statement and specify the reasons. a) He finds that the company has acquired one of its suppliers and thus specifies the supplier power is high for the company. b) She specifies that because the company faces strong competition in its sector, the growth rate (currently high than the industry average level) will drop more quickly to the industry average growth level than it would if the company had sustained competitiveness. c) He has calculated a very positive cash conversion cycle (CCC) and believes that the company has a high operating efficiency. d) He decides to use the geometric growth rate, rather than the arithmetic growth rate, of revenues and net income in the common-size analysis. e) He plans to use the two-stage growth model and assumes that the high-growth period would be 20 years given the industry average is 9 years. f) He is going to use the FCFE model with the discount rate of WACC to calculate the share price for the company. g) He assigns a stable (long-term) growth rate of 5% given that some economist has predicted the economic growth rate will be around 3.5%. Question 4 (7 marks) A student is conducting an evaluation for a company with the following statements. Answer whether it is TRUE or FALSE for each statement and specify the reasons. a) He finds that the company has acquired one of its suppliers and thus specifies the supplier power is high for the company. b) She specifies that because the company faces strong competition in its sector, the growth rate (currently high than the industry average level) will drop more quickly to the industry average growth level than it would if the company had sustained competitiveness. c) He has calculated a very positive cash conversion cycle (CCC) and believes that the company has a high operating efficiency. d) He decides to use the geometric growth rate, rather than the arithmetic growth rate, of revenues and net income in the common-size analysis. e) He plans to use the two-stage growth model and assumes that the high-growth period would be 20 years given the industry average is 9 years. f) He is going to use the FCFE model with the discount rate of WACC to calculate the share price for the company. g) He assigns a stable (long-term) growth rate of 5% given that some economist has predicted the economic growth rate will be around 3.5%