答案和详解如下： 1.Free cash flow approaches are the best source of value when: A) return on assets is falling. B) a firm has significant minority interest. C) dividends are not paid. D) the cost of equity exceeds the cost of debt. The correct answer was C) Free cash flow approaches are best when dividends are not paid. The other responses have nothing to do with the decision. 2.When using the two-stage FCFE model, if increases in working capital appear too high the analyst should: A) use changes that are based upon a working capital ratio that is closer to the industry average. B) normalize them to be equal to zero. C) switch to a constant growth model. D) switch to a three-stage model. The correct answer was A) The best solution is to use changes that are based upon a working capital ratio that approximates the industry average. The problem will not be eliminated by switching to a three-stage FCFE model or a constant growth model. 3.What is the most likely reason that you get an extremely low value from the three-stage FCFE model? Capital expenditures: A) are significantly higher than depreciation during the high-growth phase. B) offset depreciation expense during the high-growth phase. C) are significantly less than depreciation during the high-growth phase. D) are significantly higher than depreciation in the stable-growth phase. The correct answer was D) If capital expenditures estimates are significantly higher than depreciation for the stable growth period, then the three-stage FCFE model might result in an extremely low value. One possible solution for the problem is to grow the capital expenditures more slowly than deprecation in the transition period to narrow the difference. Another is to assume that capital expenditures and depreciation will offset when growth normalizes. 4.Free cash flow approaches are the best source of value when: A) free cash flows track profitability closely over the analyst's forecast horizon. B) a firm has preferred stock. C) a firm is paying a dividend that is higher than the industry average. D) the cost of equity exceeds the cost of debt. The correct answer was A) Free cash flow approaches are best when those flows are a good indication of a firm’s profitability over the analyst’s forecast horizon. 5.Mark Washington, CFA, uses a two-stage free cash flow to equity (FCFE) discount model to value Texas Van Lines. His analysis yields an extremely low value, which he believes is incorrect. Which of the following is NOT likely to be a cause of this suspect valuation estimate? A) The cost of equity estimate in the stable growth period is too high for a stable firm. B) Earnings are temporarily depressed because of a one-time extraordinary accounting charge in the most recent fiscal year. C) Capital expenditures estimates are significantly greater than depreciation in the stable growth period. D) The forecast of working capital as a percentage of revenues in the stable growth period is not large enough to maintain the long-term sustainable growth rate. The correct answer was D) The larger the estimate of working capital as a percentage of revenues, the larger the investment in net working capital, and the lower the free cash flow to equity in the stable period. A low stable-period FCFE estimate will result in a low estimate of value today. The solution is to use a working capital ratio closer to the long-run industry average. If the cost of equity estimate in the stable growth period is too high, the terminal value will be too low. Because the terminal value typically makes up a large portion of the current value, this will cause the current value estimate to be too low. The solution is to use a cost of equity estimate based on a beta of one. If earnings are temporarily depressed, all the FCFE estimates will be low, and the current value estimate will be low. The solution is to use an estimate of long-run normalized earnings. If capital expenditures are much larger than depreciation, stable-period FCFE will be too low, and the current value estimate will be low. The solution in this case is to set capital expenditures equal to depreciation. In effect, we are assuming a stable firm invests just enough to maintain the productive capacity of its existing assets. | 
发表于 2008-5-20 11:38
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