Greater Brands is considering the purchase of a regional fast casual chain Plaza Taco. Plaza Taco would be added to a growing list of Greater Brands franchisors targeted toward niche ethnic food segments in the US and in northern Mexico, market areas.  The current cash flow from assets for Plaza Taco is $7.1 million and are expected to grow at a rate 10% per year for the next five (5) years before leveling off to a 4% growth rate for the indefinite future.   The cost of capital for Greater Brands  and Plaza Taco are 11  percent and 9 percent, respectively. Plaza  currently has 2.5 million shares of stock outstanding and $22 million in net debt.  What is the maximum price per share Greater Brands should pay for Plaza Taco? Problem Counts 6 Points

Consider both Statements. Statement 1.  Discounting an investment’s Annual Economic Value Added cash flow stream is equivalent to calculating the investment’s NPV. Statement 2. There is a positive correlation between Economic profits (EVA)  and stock prices.

Most of the moisture in the Eastern United States comes from ______________ air masses.

The process that generally lifts air in Florida in the summer and causes rain, often in intense thunderstorms, is ________________.

Golden Lasso Buffets pays dividends once a year. The last dividend payment by Golden Lasso Buffets Inc. was $3.15 per share. Dividends are anticipated to maintain a growth rate of 2.2 percent forever. If the stock sells for $59.50 per share, what is the required rate of return (also known as discount rate) demand by investors in this asset class?   This Problem Counts 3 Points

For an investor in US companies which of the following risks can be mitigated through portfolio diversification?

Which of the following does NOT contribute to controlling the motion of the wind?

This Problem Counts 2 Points   You just won the grand prize in the Alabama State Lottery and were told that your $2,350,500 prize was to be paid out to you over the next 15 years in annual payments of $156,700 per year.  Assuming a cost of capital of 4% what is the actual present value of your winnings. Round your answer to the nearest $1.

This Question Counts 2 Points Consider the financial data for US- based firms X, Y and Z. Which firm has the lower cost of capital? Assume that all firms pay the same tax rate and normal business conditions apply (in other words don’t make any extreme assumptions. For example: the market risk premium drops to zero. etc.) Firm X Firm Y Firm Z Beta .12 1.0 2.0 Debt Basis Points (Credit Default Premium) 303 500 100 % debt in capital structure 50% 80% 5%

This Problem Counts 3 Points Given the following information, find the discount rate needed to make the project break-even (NPV=$0).  The tax rate is 21%.  Depreciation is calculated on a straight-line basis over the life of the project with a $1 salvage value.   Yr 0 Yr 1 Yr 2 Yr 3 Capital Investment $-10,000 EBITDA $4,000 $4,000 $6,000