Exhibit 13.2 Use the Information Below for the Following Problem(S) At the end of the year 2004 the Office Equipment Industry had free cash flow to equity (FCFE) of $2.50 per share. The following annual growth rates in FCFE are projected: \[\begin{array} { c c } \text { Year } & \text { Grapth Rata } \\ \hline 2005 & 10 \% \\ 2006 & 15 \% \\ 2007 & 20 \% \\ 2008 & 25 \% \\ 2009 & 20 \% \\ 2010 & 15 \% \\ 2011 & 10 \% \\ 2012 & 7 \% \end{array}\] From year 2013 onward growth in FCFE is expected to remain constant at 5% per year. The industry has a beta of 0.90 and the current industry price is $105. Currently the yield on 10-year Treasury notes is 5% and the equity risk premium is 4% -Refer to Exhibit 13.2.Calculate the present value now (Year 2004)of FCFE during the period of constant growth (that is for years 2013 onwards).

A) $116.15 B) $97.03 C) $155.58 D) $89.86 E) $67.89 A) $116.15 B) $97.03 C) $155.58 D) $89.86 E) $67.89

Exam 13: Industry Analysis

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Exhibit 13.2 Use the Information Below for the Following Problem(S) At the end of the year 2004 the Office Equipment Industry had free cash flow to equity (FCFE) of $2.50 per share. The following annual growth rates in FCFE are projected: Year Grapth Rata 2005 10\% 2006 15\% 2007 20\% 2008 25\% 2009 20\% 2010 15\% 2011 10\% 2012 7\% From year 2013 onward growth in FCFE is expected to remain constant at 5% per year. The industry has a beta of 0.90 and the current industry price is $105. Currently the yield on 10-year Treasury notes is 5% and the equity risk premium is 4% -Refer to Exhibit 13.2.Calculate the present value now (Year 2004)of FCFE during the period of constant growth (that is for years 2013 onwards).

(Multiple Choice)

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Question 81

A number of factors affect the cash flow and risk prospects of different industries.Which of the following is not such a factor?

(Multiple Choice)

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Question 82

Cyclical industries are attractive investments during the early stages of an economic recovery.

(True/False)

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Question 83

To estimate earnings per share an analyst will start by estimating

(Multiple Choice)

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Question 84

Which of the following statements is not true?

(Multiple Choice)

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Question 85

Toward the end of a recession,

(Multiple Choice)

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Question 86

Because all firms in an industry do not move together there is little value in industry analysis.

(True/False)

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Question 87

Which of the following statements regarding global industry analysis is true?

(Multiple Choice)

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Question 88

When the government introduces a licensing requirement for an industry,it reduces the barriers to entry for the industry.

(True/False)

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Question 89

A number of economic variables affect both the economy and industries.Which of the following statements is false?

(Multiple Choice)

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Question 90

Showing 81 - 90 of 90

A number of factors affect the cash flow and risk prospects of different industries.Which of the following is not such a factor?

Cyclical industries are attractive investments during the early stages of an economic recovery.

To estimate earnings per share an analyst will start by estimating

Which of the following statements is not true?

Toward the end of a recession,

Because all firms in an industry do not move together there is little value in industry analysis.

Which of the following statements regarding global industry analysis is true?

When the government introduces a licensing requirement for an industry,it reduces the barriers to entry for the industry.

A number of economic variables affect both the economy and industries.Which of the following statements is false?

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

Macroanalysis and Microvaluation of the Stock Market

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

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