答案和详解如下： 35.Which of the following is the least likely reason for Carson’s decision to use FCFE in valuing Overhaul rather than FCFF? A) Overhaul’s capital structure is stable. B) FCFE is an easier and more straightforward calculation than FCFF. C) Overhaul’s debt ratio is significantly higher than the industry average. D) FCFE is positive. The correct answer was C) The difference between FCFF and FCFE is related to capital structure and resulting interest expense. When the company’s capital structure is relatively stable, FCFE is easier and more straightforward to use. FCFF is generally the best choice when FCFE is negative or the firm is highly leveraged. The fact that Overhaul’s debt ratio is significantly higher than the industry average would argue against the use of FCFE. Hence, this is the least likely reason to favor FCFE. 36.Assuming that Carson is using May 1, 2005 as his date of valuation, what is the estimated value of the firm’s equity under the scenario most suited to using the two-stage FCFE method? A) $173.3 million. B) $125.2 million. C) $129.5 million. D) $183.7 million. The correct answer was B) The “sustained-growth” scenario is the only scenario suitable for using the two-stage method, in part because the “high-growth” scenario uses three different required rates of return. First, we need to calculate estimated FCFE in 2006. FCFF = NI+NCC+[Int × (1 - tax rate)] – FCInv - WCInv
= 16.9 + 80 + [34 × (1 - .35)] – [(480-240) - (400-160) + 80] – [(55 - 70) - (50 - 50)]
= 16.9 + 80 + 22.1 – 80 – (-15)
= 54
FCFE = FCFF – [Int × (1 - tax rate)] + Net Borrowing
= 54 – [34 × (1 - .35)] + (-26.9)
= 54 – 22.1 – 26.9
= $5 million in 2006 Having calculated FCFE in 2006, we can calculate FCFE for 2007 through 2011 using the growth rates provided:
| 2007 | 2008 | 2009 | 2010 | 2011 | Growth in FCFE | 40.0% | 15.7% | 8.6% | 9.1% | 8.3% | Implied level of FCFE
(in millions) | $7.0 | $8.1 | $8.8 | $9.6 | $10.4 |
Now that we know FCFE, we can discount future FCFE back to the present at the cost of equity. In the first stage of the two-stage model, we determine the terminal value at the start of the constant growth period as follows: Terminal Value = (10.4 × 1.06)/(.12 - .06) = $183.733 million. In the second stage, we discount FCFE for the first six years and the terminal value to the present. Equity Value = 5.0/(1.12)1 + 7.0/(1.12)2 + 8.1/(1.12)3 + 8.8/(1.12)4 + 9.6/(1.12)5 + (10.4 + 183.7333)/(1.12)6
Equity Value = 4.46 + 5.58 + 5.77 + 5.59 + 5.45 + 98.35
Equity Value = $125.20 million 37.What is the expected growth rate in FCFF that Carson must have used to generate his valuation of $1.08 billion? A) 12%. B) 7%. C) 5%. D) 0%. The correct answer was B) Since Firm Value = FCFF1/(WACC - g), we first need to determine FCFF1, which is FCFF in 2006: FCFF = NI + NCC + [Int × (1 - tax rate)] – FCInv – WCInv
= 16.9 + 80 + [34 × (1 - .35)] – [(480-240) - (400-160) + 80] – [(55 - 70) - (50 - 50)]
= 16.9 + 80 + 22.1 – 80 – (-15) = 54 Firm Value = FCFF1 / (WACC - g) 1080 = 54 / (0.12 - x) 1080 (0.12) – 1080 x = 54
129.6 – 1080 x = 54
75.6 = 1080 x
0.07 = x
The expected growth rate in FCFF that Carson must have used is 7%. 38.If Carson had estimated FCFE under the assumption that Overhaul Trucking maintains a target debt-to-asset ratio of 36 percent for new investments in fixed and working capital, what would be his forecast of 2006 FCFE? A) $26.5 million. B) $16.9 million. C) $9.6 million. D) $22.4 million. The correct answer was A) FCFE = NI – [(1 - DR) × (FCInv - Dep)] – [(1 - DR) ×WCInv] Where: DR = target debt to asset ratio FCFE = 16.9 – [(1 – .36) × (((480-240) - (400-160) + 80) – 80)] – [(1 – .36) × ((55 – 70) – (50 – 50))]
= 16.9 – (.64 × 0) – (.64 × (-15))
= 16.9 + 0 + 9.6 = 26.5 39.Regarding the statements made by Carson and Eckhardt about the value of Overhaul in the high-growth scenario: A) Carson’s statement is correct; Eckhardt’s statement is correct. B) Carson’s statement is incorrect; Eckhardt’s statement is correct. C) Carson’s statement is incorrect; Eckhardt’s statement is incorrect. D) Carson’s statement is correct; Eckhardt’s statement is incorrect. The correct answer was A) This is a complex problem. It would help to create a table:
| 2006 (year 1) | 2007
(year 2) | 2008
(year 3) | 2009
(year 4) | 2010
(year 5) | 2011
(year 6) | 2012
(year 7) | Growth in FCFE (given) | n/a | 30% | 30% | 30% | 21% | 12% | 3% | Forecast FCFE (calculated) | 5.0 | 6.50 | 8.45 | 10.99 | 13.29 | 14.89 | 15.33 | Required return to equity (given) | 20% | 20% | 20% | 20% | 15% | 15% | 15% | Total discount factor (calculated) | 1.20 | (1.20)2
| (1.20)3
| (1.20)4
| (1.20)4(1.15) | (1.20)4(1.15)2
| (1.20)4(1.15)3
| PV of FCFE | 4.17 | 4.51 | 4.89 | 5.30 | 5.57 | 5.43 | 4.86 |
We begin with the forecast growth rates in FCFE in line 1. Since we have previously calculated that FCFE is $5 million in 2006, we can use the growth rates from line 1 to forecast FCFE in each year on line 2. Line 3, required return to equity, is given. Using that, we can calculate discount factors in line 4. Notice that the total discount factor is simply each year’s factor multiplied together. For example, the total discount factor for year 4 is (1.20)4 so the total discount factor for year 5, when the year 5 required rate of return drops from 20% to 15%, becomes (1.20)4(1.15). Using the total discount factors from line 4, we can calculate the present value of each year’s cash flow in line 5. For example, the present value of year 2010 FCFE of $13.29 million will be $13.29/[(1.20)4(1.15)] or $5.57 million. Once we have the discounted cash flows for each year, we need to calculate the terminal value. Terminal value will be: TV = (15.33)(1.03) / (.10 - .03) TV = 15.7899 / .07 TV = $225.57 million Note that the required rate of return used for the terminal value is the rate for the steady-growth period, which is lower than that used in the high-growth phase (stage) or the declining growth phase (stage two). We now need to discount terminal value back using the total discount factor for 2012: PV of terminal value = $225.57 million / [(1.20)4(1.15)3] PV of terminal value = $71.53 million Adding together the discounted cash flows for each year with the discounted terminal value, we have: Equity value = 4.17 + 4.51 + 4.89 + 5.30 + 5.57 + 5.43 + 4.86 + 71.53 = $106.26 million Since the equity value of the firm is $106.26 million, Burcar should be willing to pay up to $106.26 x 0.15 = $15.94 million for a 15% stake in the firm. Since this is slightly less than $16 million, Carson ’s statement is correct. The terminal value represents ($71.53 / $106.26 = ) 67.3% of the firm’s present value, so Eckhardt’s statement is also correct. | 
发表于 2008-5-20 14:14
|