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poison pill is also known as a corporate restructuring.

A) True
B) False

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Suppose Yon Sun Corporation's free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future.If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?


A) $948
B) $998
C) $1,050
D) $1,103
E) $1,158

F) C) and E)
G) None of the above

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Which of the following does NOT always increase a company's market value?


A) Increasing the expected growth rate of sales.
B) Increasing the expected operating profitability (NOPAT/Sales) .
C) Decreasing the capital requirements (Capital/Sales) .
D) Decreasing the weighted average cost of capital.
E) Increasing the expected rate of return on invested capital.

F) A) and E)
G) All of the above

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Which of the following is NOT normally regarded as being a good reason to establish an ESOP?


A) To increase worker productivity.
B) To enable the firm to borrow at a below-market interest rate.
C) To make it easier to grant stock options to employees.
D) To help prevent a hostile takeover.
E) To help retain valued employees.

F) A) and B)
G) A) and C)

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