The following data is relevant for all the remaining problems related to Acme Inc.

Selected Information from the Statement of Cash Flows

Year	2017	2018	2019
Operating Activities
Cash Flow from Operating Activities	$19,480	$21,815	$20,590
Investing Activities:
Fixed Assets Acquired, Net	($5,595)	($6,595)	($6,920)
(Acquisition) Sale of Businesses, Net	$1,605	$1,790	($6,530)
(Purchase) Sale of Investments	($3,310)	($2,030)	$1,455
Cash Flow from Investing Activities	($7,300)	($6,835)	($11,995)
Financing Activities:
Increase (Decrease) in Short-Term Borrowing	$4,410	($6,110)	$1,805
Increase (Decrease) in Long-Term Debt	$1,266	$12,220	$3,380
Increase (Decrease) in Common Stock	($9,100)	($11,945)	($7,025)
Dividends Paid	($6,880)	($6,901)	($6,989)
Cash Flow from Financing Activities	($10,304)	($12,736)	($8,829)
Net Increase (Decrease) in Cash & Equivalents	$1,876	$2,244	($234)
Cash at Beginning of Year	$5,360	$7,235	$9,480
Cash at End of Year	$7,236	$9,479	$9,246

Other data:

Year	2016 (now)	2017(year+1)	2018(year+2)	2019(year+3)
Net income		$18,679	$21,415	$20,512
Total common shareholder's equity	$50,003	$61,802	$76,316	$89,839
Interest Income		$255	$660	$525
Interest Expense		$610	$1,051	$1,075
Tax rate		40%	40%	40%
Number of shares outstanding	9,547

Acme's market beta is currently 1.4. The risk-free rate in the economy is 2.5% and the market risk premium is expected to be 7%.Acme's cost of debt (interest rate) is 8.304%. Acme currently has 33% debt in its capital and 67% equity and it plans to stick with this capital structure in future. Acme's long-term sustainable growth in net income, residual net income, residual ROCE and free cash flows to common stockholders and free cash flows to equity and debt holders is projected to be 5% after year 2019. This is not the growth in its dividends in future because Acme expects to change its payout policy in future. For the purpose of this company's analysis, year 2016 is now, year 2017 is year+1, and so on. Acme has no preferred stock or minority interest. Acme's net income is also its comprehensive income.

What is Acme's cost of common stock according to its current capital structure?

		9.50%
		12.30%
		10.06%
		10.80%

What is Acme's unlevered beta?

		1.400
		2.090
		0.938
		1.081

What is Acme's weighted average cost of capital (WACC) according to its current capital structure?

		9.89%
		2.50%
		8.30%
		10.30%

What is Acme's free cash flow to debt and equity stakeholders in year 2018?

		$15,980
		$13,367
		$14,014
		$12,529

How much is Acme's free cash flow to common stockholders in year 2019?

		$15,980
		$10,670
		$9,474
		$14,014

What is Acme's residual net income (residual CI) in year 2017?

		$18,679
		$7,602
		$12,529
		$10,487

What is Acme's residual ROCE in year 2017?

		12.300%
		25.056%
		34.651%
		37.356%

What is the present value of continuing value of Acme's free cash flow to equity and debt stakeholders?

		$142,328
		$27,920
		$201,571
		$153,470

What is the present value of continuing value of Acme's free cash flow to common stockholders?

		$142,328
		$27,920
		$153,470
		$201,571

What is the present value of continuing value of Acme's residual ROCE*Book value growth factor?

		1.0000
		1.7967
		0.2097
		2.0287

What is the present value of Acme's free cash flow to equity and debt stakeholders from years 2017 to 2019?

		$153,470
		$27,920
		$201,571
		$142,328

What is the price per share of Acme's common equity according to the free cash flow to common stockholders valuation model?

		$27.92
		$19.00
		$153.47
		$16.53

What is Acme's value to 2017 earnings ratio?

		1.1679
		0.8555
		2.6770
		9.7118

What is the risk neutral price per share of Acme's common equity according to the Residual ROCE valuation model? Assume a long-term growth rate of 2% for this analysis because the previous assumption of 5% is higher than the risk-free rate.

		$71.43
		$374.12
		$38.00
		$1.06

If Acme's long term growth in cash flows to common shareholders and net income assumption is 10% instead of the current estimate of 5%, its share price estimate will be:

		Exactly twice as much as the current estimate at 5% growth.
		cannot be computed due to the growth being higher than the discount rate r.
		More than twice as much as the current estimate at 5% growth.
		Less than twice as much as the current estimate at 5% growth.