Which of the following factors typically will NOT influence the magnitude of the market-to-book (M/B) ratio? 1. An increase in the size of the firm as measured by its total assets through internal expansion, all else remaining unchanged 2. An increase in the growth rate of the firms book value (shareholders equity), all else remaining unchanged 3. The industry sector within which the firm operates 4. An increase in the firms profitability, all else remaining unchanged

An analyst has provided you with the following actual financial information developed from the reformulated financial statements of Tsawwassen Inc. for the year 2020, and then a set of forecasted financial information for the two-year period, 2021 2022: 2020 Actual: sales = $250,000 operating profit margin after tax = 0.25 asset turnover ratio = 1.5 2021 Forecasts: sales growth = 5% operating profit margin after tax = 0.25 asset turnover ratio = 1.75 2022 Forecasts: sales growth = 3% operating profit margin after tax = 0.25 asset turnover ratio = 2.0 In conjunction, you have also been provided with the following additional information: the forecasted growth rate in operating income after tax (OI) after 2022 is 3% the firms weighted average cost of capital is 8% Having received this information from the analyst, you have now conducted your own investigation into the financial prospects of Tsawwassen. While you agree with the analysts core forecasts, you disagree with both their forecast of the terminal growth rate and their estimate of the appropriate discount rate. Specifically, you believe that the appropriate terminal growth rate should be 1.5% instead of 3% and that the discount rate should be 7% instead of 8%. Given this information, which of the following statements is TRUE? 1. Your estimate of Tsawwassens overall firm value will be higher than the analysts estimate 2. Your estimate of Tsawwassens overall firm value will be lower than the analysts estimate 3. Based on the information provided, it is not possible to estimate Tsawwassens overall firm value 4. Your estimate of Tsawwassens overall firm value will be the same as the analysts estimate