A stock has a beta of 0.8, the risk-free rate is 2%, and the expected market return is 10%. What is the expected return of the stock?

A stronger dollar will shift the U.S. aggregate demand curve to the _____ and _____ output demanded.

Brutus Corporation is considering adding a new factory to increase its productive capabilities. The new factory will have an immediate capital expenditure of 100 million (time 0) and a delayed investment needed after two years, which is included in the FCF below. However, if Brutus decides to build the factory, the increase in production will create incremental FCF’s of 360 million in the first year (time 1), negative 431 million in the second year (time 2), and 171.6 million in the third year (time 3). Your brand-new analyst tells you that the IRR for this factory project is 20%. Assuming Brutus’s discount rate is 12%, should the firm pursue this new factory?

Brutus Co. is deciding whether to sponsor a racing team for a cost of $1 million. The sponsorship would last for three years and is expected to increase cash flows by $430,000 per year. If the discount rate is 6.9%, what will be the change in the value of the company if Brutus Co. chooses to go ahead with the sponsorship?

You work for a levered buyout firm and are evaluating a potential buyout of TTUN Inc. TTUN’s stock price is $20, and it has 4 million shares outstanding. You believe that if you buy the company and replace its dismal management team, its value will increase by 80%. You are planning on doing a levered buyout of TTUN and will offer $23 per share for control of the company. Will shareholders sell their shares and how much equity will you own if improvements are made?

A firm has a total market value of assets of $300 million that includes $60 million of cash and 8 million shares outstanding. If the firm uses $30 million of its cash to repurchase shares, what is the new price per share? (Assume perfect capital markets.) 

Brutus Buckeye Exploration has a current stock price of $3.00 and is expected to pays its expected annual dividend of $0.28 next year. Which of the following is closest to the company’s equity cost of capital if long term growth is expected to be 2%?

Use the table for the question(s) below. Name Market Capitalization ($ million) Enterprise Value       ($ million) P/E Price/ Book Enterprise Value/ Sales Enterprise Value/ EBITDA Gannet 6350 10,163   7.36 0.73 1.4 5.04 New York Times 2423   3472 18.09 2.64 1.10 7.21 McClatchy   675   3061    9.76 1.68 1.40 5.64 Media General   326   1192 14.89 0.39 1.31 7.65 Lee Enterprises   267   1724    6.55 0.82 1.57 6.65 Average     11.33 1.25 1.35 6.84 Maximum     +60% 112% +16% +22% Minimum     -40% -69% -18% -19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $600 million, EPS of $0.50, excess cash of $68 million, $18 million of debt, and 120 million shares outstanding. If the average PE ratio is used for comparable businesses is used, which of the following is the best estimate of the firm’s share price?

Information about the free online tutorial called Brainfuse is found in which section of the syllabus.

Which of the following is a disadvantage of the Net Present Value rule?