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Which of the following statements regarding firm valuation are TRUE? Select all that apply Indirect DCF model first calculates the value of the firm and the subtracts the value of net debt to determine the value of equity Weighted average cost of capital is used to determine the discount factor for cash flows to the firm Direct approach to DCF valuation is significantly more straight-forward because it derives the value of the equity directly The terminal value of cash flow is calculated by multiplying the previous period cash flow with g* (r-g)

Which of the following statements regarding firm valuation are TRUE? Select all that apply Indirect DCF model first calculates the value of the firm and the subtracts the value of net debt to determine the value of equity Weighted average cost of capital is used to determine the discount factor for cash flows to the firm Direct approach to DCF valuation is significantly more straight-forward because it derives the value of the equity directly The terminal value of cash flow is calculated by multiplying the previous period cash flow with g* (r-g)

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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Which of the following statements regarding firm valuation are TRUE? Select all that apply Indirect DCF model first calculates the value of the firm and the subtracts the value of net debt to determine the value of equity Weighted average cost of capital is used to determine the discount factor for cash flows to the firm Direct approach to DCF valuation is significantly more straight-forward because it derives the value of the equity directly The terminal value of cash flow is calculated by multiplying the previous period cash flow with g* (r-g)
Transcribed Image Text:Which of the following statements regarding firm valuation are TRUE? Select all that apply Indirect DCF model first calculates the value of the firm and the subtracts the value of net debt to determine the value of equity Weighted average cost of capital is used to determine the discount factor for cash flows to the firm Direct approach to DCF valuation is significantly more straight-forward because it derives the value of the equity directly The terminal value of cash flow is calculated by multiplying the previous period cash flow with g* (r-g)
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