Reference no: EM132989763

Problem 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

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

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

Problem 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

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

Problem 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

Problem 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

Problem 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