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Ruston Plastics Corp.'s WACC is 12%. Its end-of-year free cash flow (FCF1) is expected to be $25 million, and the FCFs are expected to grow at a constant rate of 5% per year in the future. Assume the firm has zero non-operating assets. What is the total firm value using the corporate valuation model? a. 28.00 million b. 25.00 million c. 26.25 million d. 357.14 million You have been assigned the task of using the corporate valuation model to estimate Petry Corporation's intrinsic value. You estimate that the market value of the firm's operations is $600 million. The company has $50 million non-operating assets, $290 million of long-term debt and preferred stock, and it has 30 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock? O a. $18 Ob. $12.0 Oc. $20 O d. $43 For a 20-year $1,000 par value 6% annual coupon bond that is selling at a premium, which of the following is TRUE? O a. The YTM of this bond is below 6%. Ob. Because this bond is selling at a premium, it would be worth more than $1,000 at maturity. oc. The bond pays $60 in interest every six months. od. Since this is a premium bond, so the bond price is expected to increase over time. Which of the following statements is TRUE? O a. The penalty for spending before earning represents the interest rate from the point of view of the lender. Ob. There is no such thing as the PV of a perpetuity. Oc. Ceteris Paribus, as a borrower, you would prefer a loan that has a higher effective annual rate (EAR). od If the compounding frequency is more than once a year, EAR should be greater than APR

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