"In the equity free cash flow model, if the value for the ND (net debt) is negative, it means that in the period, the principal repayment is higher than the newly issued debt." True or false?

Select one:

a. True

b. False

The risk-free rate is 4%; the market risk premium is 8%. LDC Companys stock has a beta of 1.5. The last dividend was $4, and the dividend growth rate (g) is expected to be a constant of 10%. The stocks current market price (P0) is $70.

If you buy the stock now, what is the expected rate of return for the first year? Assume that the stock price will reach the equilibrium level at t=1 if it is currently mispriced.

Select one:

a. 21.53%

b. 24.75%

c. 18.43%

d. 15.87%

Based on the following data, what is the free cash flow for year 1?

Year		1
Revenue		665.00
Fixed costs		80.00
Variable costs		250.00
Additional investment in NWC		15.00
Additional investment in operating long-term assets		90.00
Depreciation		75.00
Tax rate	0.40

Select one:

a. $121

b. $126

c. $137

d. $103

e. $116