1. The following are desirable characteristics of targets:

A. Rapidly growing cash flows and earnings.

B. Low P/E ratios.

C. Market value less than book value

D. All of the above.

2. The discount rate used to discount future cash flows should:

A. Be equal to yield on long-term U.S. Treasuries.

B. Be 2% greater than yield on long-term U.S. Treasuries.

C. Incorporate a risk premium equal to perceived risks and volatility of future cash flow stream.

D. Usually will be 1% greater than yield on high yield bonds.

Assuming the Sales Growth rate for ACME Co., in year 6 is 6% and the NOPAT Margin, and CAPX as a % of Sales percentages are the same as in year 5. The Free Cash Flow in Year 6 is:

3. The Free Cash Flow in Year 6 is:

A. 45.5 million

B. $47.8 million

C. $48.2 million

D. $42.9 million

4. The Total Enterprise Value for Acme Co., is:

A. $804.1 million.

B. $456.3 million.

C. $595.4 million.

D. $495.4 million