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NEW QUESTION: 1
Ivan Johnson is reviewing the investment merits of BioTLab, a fast-growing biotechnology company.
BioTLab has developed several drugs, which arc being licensed to major drug companies. BioTLab also has several drugs in phase III trials (phase III trials are the last testing stage before FDA approval).
Johnson notes that two drugs recently received approval which should provide BioTLab solid revenue growth and generate predictable cash flow well into the future. Based on the potential for the two drugs, BioTLab's estimated annual cash flow growth rate for the next two years is 25%, and long-term growth is expected to be 12%. Because of BioTLab's attractive investment opportunities, the company does not pay a dividend. BioTLab's current weighted average cost of capital is 15% and its stock is currently trading at
$50 per share. Financial information for BioTLab for the most recent 12 months is provided below:
* Net working capita! excluding cash increased from $7,460,000 to $9,985,000;
* Book value increased from $81,250,000 to $101,250,000.
* BioTLab currently has no debt.
* Research facilities and production equipment were purchased for $8,450,000.
* BioTLab held non-operating assets in the amount of $875,000.
* Net income for the 12 months was $20,000,000.
* BioTLab has a marginal tax rate of 40%.
* Noncash charges for depreciation and restructuring for the 12 months were $1,250,000.
BioTLab's management has indicated an interest in establishing a dividend and will fund new drug research by issuing additional debt.
Johnson also reviews a competitor to BioTLab, Groh Group, which has a larger segment operating in a highly cyclical business. The Groh Group has a debt to equity ratio of 1.0 and pays no dividends. In addition, Groh Group plans to issue bonds in the coming year.
If BioTLabs establishes a dividend and issues additional debt, the most likely effect on FCFF will be;
A. an increase in FCFF.
B. no effect.
C. a decrease in FCFF.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
If BioTLab established a dividend rhere would no impact on either FCFF or FCFE. Changing the company capital structure by increasing debt will not impact FCFF, although it will initially increase FCFE by the amount of debt issued and then reduce FCFE thereafter by the after-tax interest expense. (Study Session
12, LOS 41.h)

NEW QUESTION: 2
A client application is subscribing to as many as five different topics (no wildcards are possible). Given that the number of client applications may vary and subscriptions are not durable, what is the best option for creating a subscription?
A. Create a temporary dynamic queue and use MQSUB with the list of topic names separated bycommas and stored in the ObjectString field of the MQSD structure.
B. Create a temporary dynamic queue and call MQSUB for each topic.
C. Use MQSUB with the MQSO_MANAGED option for the first topic and subsequent calls withMQSO_ALTER for other topics.
D. Use MQSUB with the MQSO_MANAGED option and the list of topic names separated bycommas and stored in the ObjectString field of the MQSD structure.
Answer: B

NEW QUESTION: 3
You are hosting a meeting with all of the vendors that have received a copy of your statement of work. In this meeting, you'll be discussing the statement of work, clarifying the details, and answering any questions the vendors may have about the project. What is this meeting called?
A. Select sellers process
B. Negotiations
C. Bidder conference
D. Sales meeting
Answer: C