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An analyst values a levered firm by discounting operating free cash flows (OFCF) by the WACC after tax to find the firm's enterprise value (EV). The market value of assets (V) is found by adding cash and marketable securities to the enterprise value. The market capitalisation of equity (E) is calculated by subtracting interest-bearing liabilities (D) from the assets (V). Which of

An analyst values a levered firm by discounting operating free cash flows (OFCF) by the WACC after tax to find the firm's enterprise value (EV). The market value of assets (V) is found by adding cash and marketable securities to the enterprise value. The market capitalisation of equity (E) is calculated by subtracting interest-bearing liabilities (D) from the assets (V). Which of

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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An analyst values a levered firm by discounting operating free cash flows (OFCF) by the WACC after tax to find the firm's enterprise value (EV). The market value of assets (V) is found by adding cash and marketable securities to the enterprise value. The market capitalisation of equity (E) is calculated by subtracting interest-bearing liabilities (D) from the assets (V). Which of these amounts do NOT include the benefit of interest tax shields? Select one: a. EV. b. Е. с. V. d. EV, E and V. e. OFCF and D.
Transcribed Image Text:An analyst values a levered firm by discounting operating free cash flows (OFCF) by the WACC after tax to find the firm's enterprise value (EV). The market value of assets (V) is found by adding cash and marketable securities to the enterprise value. The market capitalisation of equity (E) is calculated by subtracting interest-bearing liabilities (D) from the assets (V). Which of these amounts do NOT include the benefit of interest tax shields? Select one: a. EV. b. Е. с. V. d. EV, E and V. e. OFCF and D.
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