The adjusted present value method-flow to equity method

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The adjusted present value method (APV), the flow to equity (FTE) method, and the weighted average cost of capital (WACC) method produce equivalent results, but each can have difficulties making computation impossible at times. Given this, which one of these is a correct statement? Use the FTE method when the level of debt is known over a project’s life. Use the WACC method when the level of debt is known over a project’s life. The APV method is the most commonly used method in actual practice. The WACC method is appropriate when the target debt-to-value ratio applies over a project’s life. The WACC method is preferred when evaluating a leveraged buyout.

Reference no: EM131054697

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