Which ofthesemethods discountlevered cash flows?a. APVb. WACCc. FTEd.both APV and FTE

The adjusted present value (APV) method calculates an investment's value as if it were financed only…

Answered: Which of these methods discount levered…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In the discounted cashflow method, the discount rate is used for the following reasons EXCEPTa. it removes the timing differences of cashflows.b. it serves as the required rate of return of the asset being valued.c. it removes the expected riskiness of differing assetsd. it equalizes cash inflows to cash outflows so that the value would equal to the market value.
What are the strenghts and weaknesses of the discount cash flow methods?
why discounted cash flow methods are preferred to the more traditional techniques of payback and return on capital employed
Calculate the present value and future value of an uneven cash flow stream.
The bid-ask spread: a. Includes a transaction cost component to compensate liquidity providers for their operational costs b. Includes an adverse selection component to compensate liquidity providers for the risk of trading with informed traders c. Includes a bid-ask bounce component to compensate liquidity providers for volatility d. (a) & (b) e. (a), (b) & (c)
Explain how to estimate the price per share using the free cashflow valuation model.
9 A _____currency is one whose value is set primarily by market forces of supply and demand A. Pegged B. Floating c. Managed D. Depreciated
Which of the following is TRUE? I. Internal rate of return (IRR) is a major method for determining the cost of equity. II. The cost of capital depends on the source of the funds. Group of answer choices I and II II only Neither I nor II I only
How can we show mathematically that the two approaches cash flow from operation and net income are identical?
This can occur when a selection among mutually exclusive alternatives is based wrongly on maximization of IRR on the total cash flow. O a. Investment errors O b. Ranking errors Ос. Incremental errors Od. Alternative errors
Which of the following is NOT a limitation of the payback rule? O It does not consider cash flows occurring after the payback period. O Lacks a decision criterion that is economically based. O It does not consider the time value of money. O It is difficult to calculate.
The discounted payback method discounts cash flows at the opportunity cost of capital and then calculates the payback period. TRUE/FALSE?

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Which of these methods discount levered cash flows? a. APV b. WACC c. FTE d. both APV and FTE