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NEW QUESTION: 1
General Investments is considering the purchase of a significant stake in Pacific Computer Components (PCC). Although PCC has stable production output, the company is located in a developing country with an uncertain economic environment. Since the monetary environment is particularly worrisome. General has decided to approach the valuation of PCC from a free cash flow model using real growth rates. In real rate analysis, General uses a modified build-up method for calculating the required real return, specifically:
required real return = country real rate + industry adjustment +
company adjustment
Elias Sando, CFA, an analyst with General, estimates the following information for PCC:
Domestic inflation rate = 8.738%
Nominal growth rate = 12.000%
Real country return = 3.000%
Industry adjustmen = 3.000%
Company adjustment = 2.000%
Additionally, Exhibit 1 reports information from PCC's financial statements for the year just ended (stated in LC).

PCC generally maintains relatively constant proportions of equity and debt financing and is expected to do so going forward.
Sando has gathered information on earnings before interest, taxes, depreciation, and amortization (EBITDA) and is contemplating its direct use in another cash flow approach aimed at valuing PCC.
Consider the following two statements regarding EBITDA:
Statement 1: EBITDA is not a good proxy for free cash flow to the firm (FCFF) because it does not incorporate the importance of the depreciation tax shield nor does it reflect the investment in working capital or in fixed capital.
Statement 2: EBITDA is also a poor proxy for FCFE.
The current value of PCC equity using a FCFE model is closest to:
A. LCI73,420,000.
B. LC215,150,000.
C. LCI50,380,000.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Given the assumptions stated in the problem, this is a simple single stage valuation. Using the firm's modified build-up methodology, the real required rate of return is 8% (= country real rate + industry adjustment + firm adjustment = 3% + 3% + 2%).
The real growth rate is

= 3%. FCFE is LC7.3000.000 from Question 61.
Hence, the value of PCC equity is:

(Study Session 12, LOS 4l.k)

NEW QUESTION: 2
Refer to the exhibit. What is the effect of the given configuration?

A. It enables spanning-tree to create dynamic system IDs.
B. In enables the switch to become the spanning-tree root bridge.
C. It enables the reduced MAC address feature.
D. It enables extended VLANs.
Answer: A

NEW QUESTION: 3
Examine this package:

The product table has more than 1000 rows.
You execute the procedure PROC1 from SQL*Plus with the command:
EXECUTE pack_cur.PROC1;
You then execute the procedure PROC2 from SQL*Plus with the command
EXECUTE pack_cur.PROC1;
What is the output in your session from the PROC2 procedure?
A. ERROR at line 1:
B. Row is : Row is: Row is:
C. Row is: 4 Row is: 5 Row is: 6
D. Row is: 1 Row is: 2 Row is: 3
Answer: C

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