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Calculate the earnings per share, stock price, and more

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1. Which of the following is the correct formula for cell B5 to calculate the earnings per share?

a. =B2-B3*B2/B4
b. =(B2-B3)/B4
c. =B2*(1-B3)/B4
d. =(B2+B3*B2)/B4
e. =B2*(1+B3)/B4

EPS=Earnings before tax*(1-tax)/shares outstanding

2. What should be the outcome of cell B8? Remember that the basic syntax of the IRR function is: IRR(values,guess)

a. "Accept"
b. "Reject"
c. "Indifferent"
d. "IRR=30%"
e. "30%"
Use Excel function to calculate the IRR of the cash flows. IRR=27% <30%

3. What is the correct formula to determine the stock price using the earnings model on cell B6?

a. =B1*B2/B3+(B1*B2*(B4/B3-1))/(B3-B5)
b. =B1/B3-(B1*(1+B2)*(B4/B3+1))/(B3+B5)
c. =B1/B3+B1*(1-B2*B4/B3-1)/(B3-B5)
d. =B1/B3+(B1*(1-B2)*(B4/B3-1))/(B3-B5)
e. =B1/B3+(B1*(1-B3)*(B2/B3-1))/(B3-B4)

Use the data to the right for the next two problems

4. What is the correct formula for cell B5?

a. =B2*(1-B4)+B3-B1
b. =B2-B4+B1-B3
c. =B2*(1-B4)+B1-B3
d. =B2*(1-B4)-B1+B3
e. =B2/(1-B4)*B1*B3
FCF=EBIT*(1-Tax)+Depr.-Investment in Operating assets
5. What is the free cash flow?
a. $120,500
b. $117,550
c. $ 82,550
d. $ 74,500

Use the data to the right for the next two problems
6. What should be the formula on cell C4 if you want to determine the expected rate of return of security X using the CAPM model?
a. =B4+C3*D4-B4
b. =B4+C3*(D4-B4)
c. =B4-C3*(D4+B4)
d. =B4+B3*(D4-B4)
e. =B4+D3*(C4-B4)
Expected rate of return=Risk free rate+Beta*(Market return-Risk free rate)

7. What is the expected return?
a. 18.0%
b. 10.0%
c. 13.5%
d. 6.5%

8. What is the value of cell B6?
a. 1586.8
b. 26.67
c. 13.2
d. 40
e. 80
Roundup(B1,0) function round 39.67 up to 40

Use the following information for the next two problems
PV
Year Cash Flow Cash Flows
1 $14,000 $12,726
2 $14,000 $11,564
3 $10,000 $7,510
4 $10,000 $6,830
5 $8,000 $4,968

9. What is the NPV of above project if the initial investment was $45,000?
a. $43,598
b. $-1,402
c. $11,000
d. $56,000
NPV= -45000+12726+11564+7510+6830+4968= -1402
10. Calculate the IRR and ...

Solution Summary

The expert calculates the earnings per share, stock price and more.

$2.19