答案和详解如下： 1.Which types of firms are best valued using the free cashflow to the firm (FCFF) approach? A) Firms with capital structure of 100% equity. B) Firms with significant financial leverage. C) Firms that are making no significant change to their capital structure. D) Firms that do not pay dividends. The correct answer was B) Two types of firms are best valued using the FCFF approach: 1. Firms with lots of debt (i.e., significant leverage). 2. Firms that are in the process of changing their capital structure. Firms that undergo a leveraged buyout are good candidates for valuation using the FCFF approach. 2.FCFF models are more suitable than FCFE models for valuing firms that are in the process of changing their capital structure for all of the following reasons EXCEPT: A) value of equity is small compared to the total value of the firm and is sensitive to the assumptions of growth and risk. B) these firms will have negative FCFE. C) volatility due to debt payments makes it difficult to estimate FCFE. D) operating earnings will not be affected by the change in capital structure. The correct answer was B) It is not known whether the firm will have negative FCFE. However, it is true that it may be difficult to estimate the FCFE because of volatility due to debt repayments, and that the relatively small equity value becomes extremely sensitive to assumptions about growth and risk. The operating earnings (EBIT) will not be affected by the change in the capital structure, so FCFE will remain the same as it was prior to the change in capital structure. 3.FCFF models are more useful than FCFE models in valuing all of the following EXCEPT: A) firms that undergo a leveraged buyout. B) firms that are making substantial changes to their capital structure. C) firms that have retired all of their debt. D) firms that have very high leverage. The correct answer was C) The FCFF models will not be useful in valuing firms that have retired all their debt and have 100 percent equity in their capital structure. In such a case, the two models would calculate identical values, assuming the firm doesnot have any preferred equity outstanding. 4.Free cash flow to the firm (FCFF) is superior to free cash flow to equity (FCFE) in valuation for firms that are: A) highly levered with negative free cash flow to equity. B) not paying dividends. C) unlevered. D) experiencing negative net income. The correct answer was A) FCFF is superior to FCFE when a firm has negative FCFE and is highly levered. 5.An analyst choosing between the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) valuation approaches recognizes that an increase in leverage: A) reduces FCFE by the amount of the debt. B) increases FCFE by the amount of after-tax interest. C) does not change FCFF. D) increases FCFF by the amount of the debt. The correct answer was C) FCFF = EBIT(1 - Tax rate) + DEP – FCInv – WCInv
FCFE = FCFF – Int(1 - Tax rate) + Net borrowing
FCFF is not changed by leverage. However, FCFE is increased by the amount of the debt and is decreased by the amount of after-tax interest. 6.A firm that is currently experiencing negative free cash flow to equity (FCFE), is highly levered, and pays no dividends is a good candidate for which of the following valuation methods? A) Dividend discount. B) One-stage free cash flow to equity. C) Earnings Before Interest and Taxes (EBIT) discount. D) Free cash flow to the firm (FCFF). The correct answer was D) FCFF is superior to FCFE when a firm has negative FCFE and is highly levered. 7.Using free cash flows to the firm (FCFF) instead of free cash flows to equity (FCFE) or earnings will yield a more meaningful value for a multiple when: A) earnings and FCFE are negative and the firm is highly levered. B) a firm is highly levered. C) FCFEs are negative. D) earnings are negative. The correct answer was A) The use of FCFF instead of FCFE and earnings will yield a more meaningful result when both earnings and FCFE are negative and the FCFF are positive. This is also useful when a firm is highly levered and only a small portion of its value represents equity. | 
发表于 2008-5-20 14:20
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