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4. The Valuation Process will often analyze several value drivers in order to understand where value comes from. Which of the following value drivers would be least important to the valuation?
a. Return on Invested Capital
b. Earnings per Share
c. Cash Flow Return on Investment
d. Economic Value Added
5. You have been asked to calculate a terminal value for a valuation forecast. The normalized free cash flow within the forecast is $ 11,400. A nominal growth rate of 3% will be applied along with a weighted average cost of capital of 15%. Using the dividend growth model, the terminal value that should be added to the forecast is:
a. $ 78,280
b. $ 86,200
c. $ 95,000
d. $ 97,850
6. Information from a valuation model for Gemini Corporation is summarized below:
Total present value of forecasted free cash flows $ 150,000 Terminal value added 450,000 Total present value of non-operating assets 20,000 Total present value of outstanding debts 120,000
If Gemini has 20,000 shares of outstanding stock, the value per share of Gemini is:
a. $ 15.00
b. $ 25.00
c. $ 30.00
d. $ 35.00
7. Once a merger has been finalized, one of the primary responsibilities of senior executive management as it relates to post merger integration is to:
a. Facilitate functional integration
b. Develop personnel retention programs
c. Lead change through communication
d. Manage all of the integration projects