QUESTION 87

1. Harvey Industries Pays a current dividend of $6.10 and shareholders require a 12% return. The dividend will grow at a high rate of 20% and then gradually decline to 5% over a six-year period. The value of Harvey Industries shares using the H Model is closest to:

   		a. $121.39.
   		b. $127.74.
   		c. $130.71.
   		d. $137.93.

QUESTION 88

1. A financial analyst is least likely to use a free cash flow model to value a firms equity if:

   		a. The firm pays no dividends.
   		b. Growth rates in dividends fall gradually over time.
   		c. The firm pays a stable dividend that is substantially lower than its earnings.
   		d. Estimating the value of the firm as a potential takeover candidate.