When using the discounted free cash flow model

Assignment Help Financial Management

Reference no: EM13943192

Which of the following statements is FALSE?

A) The firm's weighted average cost of capital, denoted rwacc, is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firm's equity and debt.

B) Intuitively, the difference between the discounted free cash flow model and the dividend-discount model is that in the divided-discount model the firm's cash and debt are included indirectly through the effect of interest income and expenses on earnings in the dividend-discount model.

C) We interpret rwacc as the expected return the firm must pay to investors to compensate them for the risk of holding the firm's debt and equity together.

D) When using the discounted free cash flow model we should use the firm's equity cost of capital.

Reference no: EM13943192

Questions Cloud

Business in the marketplace over the long term : Compare and contrast the DYB and GYB strategies in terms of the ability to sustain a business in the marketplace over the long term, to be competitive against rivals, and profitability.

Decided to introduce three fruit juice made from blending : CalJuice Company has decided to introduce three fruit juices made from blending two or more concentrates. These juices will be packaged in 2-qt (64-oz) cartons. One carton of pineapple-orange juice requires 8 oz each of pineapple and orange juice con..

Engine burns a stoichiometric mixture of fuel : Reaction engineering problem- Question 7 - A rocket engine burns a stoichiometric mixture of fuel ( liquid hydrogen ) in oxidant ( liquid oxygen) . The combustion chamber is cylindrical , 75 cm long and 60 cm in diameter , and the combustion proce..

What are the values of the list array after execution : For each of the following parameter-passing methods, what are the values of the list array after execution?

When using the discounted free cash flow model : The firm's weighted average cost of capital, denoted rwacc, is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firm's equity and debt. When using the discounted free cash flow model we should use ..

Performance and reward management scheme : You work for an organization operating in the built environment sector. Senior management have tasked you with producing a new performance and reward management scheme to successfully embed sustainability into the culture of the organization.

New sausage system with an installed cost : Parker is looking at a new sausage system with an installed cost of $480,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $70,000. The sausage syste..

Write a program to test the class myarray. : Design and implement the class myArray that solves the array index out of bound problem and also allows the user to begin the array index starting at any integer, positive or negative

User Account

All Pages