Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's level of debt for the year 2004.

A) $535.53 B) $600.75 C) $637.67 D) $485.98 E) $393.72 A) $535.53 B) $600.75 C) $637.67 D) $485.98 E) $393.72

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's year 2004 EBITDA per share.

A) $95.05 B) $87.15 C) $112.56 D) $104.73 E) $99.96 A) $95.05 B) $87.15 C) $112.56 D) $104.73 E) $99.96

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Estimate the firm's growth rate in sales per share.

A) 1.5% B) 2% C) 2.16% D) 4.13% E) 3.73% A) 1.5% B) 2% C) 2.16% D) 4.13% E) 3.73%

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. $\begin{array}{lrr} \begin{array}{l} \\ \\ \text{GDP}\\ \text{GDP growth}\\ \text{Sales per share}\\ \text{Operating profit margin}\\ \text{Depreciation/Fixed Assets}\\ \text{Fixed asset turnover}\\ \text{Interest rate}\\ \text{Total asset turnover}\\ \text{Debt/Total assets}\\ \text{Tax rate}\\ \end{array}\ \begin{array}{r} \\ \text{Year 2003}\\ \hline \text{11,000 Billion}\\\\ \$ 800 \\\\\\\\\\\\\\\ \end{array}\ \begin{array}{r} Estimated\\ \text{Year 2004}\\ \hline\\ 3.5 \% \\\\ 12 \% \\ 14 \% \\ 2\\ 3.5 \% \\ 0.7 \\ 45 \% \\ 36\% \end{array}\ \end{array}$ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate GDP for the year 2004.

A) $10,500 billion B) $11,000 billion C) $11,385 billion D) $10,550 billion E) $11,025 billion A) $10,500 billion B) $11,000 billion C) $11,385 billion D) $10,550 billion E) $11,025 billion

Exam 12: Macroanalysis and Microvaluation of the Stock Market

The dividend payout ratio for the aggregate market is 55 percent,the required rate of return is 15 percent,and the expected growth rate for dividends is 7 percent.Compute the current earnings multiple.

(Multiple Choice)

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Question 61

You are attempting to estimate expected earnings per share for a major stock market series.You have determined an appropriate estimate for sales per share.Which of the following methods can be used to estimate the profit margin?

(Multiple Choice)

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Question 62

Changes in the dividend payout ratio are positively related to changes in the retention rate.

(True/False)

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Question 63

The U.S.balance of payments,the federal deficit and military contract awards are ____ of aggregate economic activity.

(Multiple Choice)

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Question 64

The valuation techniques presented in the chapter can only be applied to the stock market in the United States,since the U.S.stock market is inefficient.

(True/False)

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Question 65

Future tax rates are difficult to estimate because they are politically influenced.

(True/False)

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Question 66

The initial effect of a change in monetary policy appears in and only later in .

(Multiple Choice)

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Question 67

When applying the earnings multiplier model all of the following will cause the required rate of return,k,to change except

(Multiple Choice)

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Question 68

Which of the following statements concerning asset allocation is false?

(Multiple Choice)

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Question 69

Exhibit 12.4 Use the Information Below for the Following Problem(S) Assume that the dividend payout ratio will be 45 percent when the rate on long term government bonds falls to 9 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 16 percent return. The return on equity will be 14 percent. -Refer to Exhibit 12.4.What is your expectation of the market P/E ratio?

(Multiple Choice)

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Question 70

The University of Michigan Consumer Sentiment Index is an example of a leading indicator.

(True/False)

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Question 71

Coincident indicators include economic time series that have peaks and troughs that roughly occur at the same time as the peaks and troughs of overall economic activity.

(True/False)

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Question 72

Exhibit 12.7 Use the Information Below for the Following Problem(S) You are using the free cash flow to equity (FCFE) technique to analyze U.S. equity market. The beginning FCFE is $90 and the required rate of return is 10%. Free cash flows are expected to grow at a 10% rate for the next two years and then grow at a constant rate of 7% forever. -Refer to Exhibit 12.7.What will FCFE be three years from now?

(Multiple Choice)

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Question 73

Recent studies show that money supply changes have an important impact on stock price movements.

(True/False)

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Question 74

Which of the following are not cyclical indicators?

(Multiple Choice)

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Question 75

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's level of debt for the year 2004.

(Multiple Choice)

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Question 76

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate the firm's year 2004 EBITDA per share.

(Multiple Choice)

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Question 77

Unit labor costs,the rate of inflation,the level of foreign competition,and the unemployment rate were variables tested by Finkel and Tuttle as determinants of the

(Multiple Choice)

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Question 78

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Estimate the firm's growth rate in sales per share.

(Multiple Choice)

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Question 79

Exhibit 12.6 Use the Information Below for the Following Problem(S) Consider the following information that you propose to use to obtain an estimate of year 2004 EPS for the MacLog Company. GDP GDP growth Sales per share Operating profit margin Depreciation/Fixed Assets Fixed asset turnover Interest rate Total asset turnover Debt/Total assets Tax rate \ Year 2003 11,000 Billion \ 800 \ \ Estimated Year 2004 3.5\% 12\% 14\% 2 3.5\% 0.7 45\% 36\% \ In addition a regression analysis indicates the following relationship between growth in sales per share for MacLog and GDP growth is %D Sales per share = 0.015 + 0.75(%∆GDP) -Refer to Exhibit 12.6.Calculate GDP for the year 2004.

(Multiple Choice)

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(76)

Question 80

Exam 12: Macroanalysis and Microvaluation of the Stock Market

The dividend payout ratio for the aggregate market is 55 percent,the required rate of return is 15 percent,and the expected growth rate for dividends is 7 percent.Compute the current earnings multiple.

You are attempting to estimate expected earnings per share for a major stock market series.You have determined an appropriate estimate for sales per share.Which of the following methods can be used to estimate the profit margin?

Changes in the dividend payout ratio are positively related to changes in the retention rate.

The U.S.balance of payments,the federal deficit and military contract awards are ____ of aggregate economic activity.

The valuation techniques presented in the chapter can only be applied to the stock market in the United States,since the U.S.stock market is inefficient.

Future tax rates are difficult to estimate because they are politically influenced.

The initial effect of a change in monetary policy appears in ____ and only later in ____.

When applying the earnings multiplier model all of the following will cause the required rate of return,k,to change except

Which of the following statements concerning asset allocation is false?

The University of Michigan Consumer Sentiment Index is an example of a leading indicator.

Coincident indicators include economic time series that have peaks and troughs that roughly occur at the same time as the peaks and troughs of overall economic activity.

Recent studies show that money supply changes have an important impact on stock price movements.

Which of the following are not cyclical indicators?

Unit labor costs,the rate of inflation,the level of foreign competition,and the unemployment rate were variables tested by Finkel and Tuttle as determinants of the

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Security Valuation Principles

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts,convertible Securities,and Other Embedded Derivatives

Professional Money Management, alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

Filters

The initial effect of a change in monetary policy appears in and only later in .