Reference no: EM132990724

Question 1. According to the author (Damodaran), if a firm is small and growing at a very high growth rate a three-stage on the n-stage model should be used, not a two-stage model. True or False

Question 2. In discounting cash flows, if inflation is high, we should still use nominal cash flows. True or False

Question 3. Stable growth firms tend to have betas closer to one. True or False

Question 4. The reinvestment rate in stable growth is a function of the stable growth rate and what you believe the firm will earn as a return on capital in perpetuity. True or False

Question 5. Most growth firms have difficulty sustaining their growth for long periods, especially while earning excess returns. True or False

Question 6. In valuing firms, we either start from either net income or from EBITDA depending on if we are using cash flows for equity investors or for all claimholders in the firm. True or False

Question 7. According to the author (Damodaran) operating leases should be converted into debt and R7D expenses should be converted into an asset. True or False

Question 8. The author implies that updating earnings and assets (financial statements) is more important for large and stable firms than for small and more volatile firms. True or False