Which of the following statements is NOT CORRECT? why? The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends. The corporate valuation model discounts free cash flows to the firm (FCFF) by the required return on equity. The corporate valuation model can be used to find the value of a division. Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.
Which of the following statements is NOT CORRECT? why? The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends. The corporate valuation model discounts free cash flows to the firm (FCFF) by the required return on equity. The corporate valuation model can be used to find the value of a division. Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter13: Valuation: Earnings-based Approach
Section: Chapter Questions
Problem 1QE
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Which of the following statements is NOT CORRECT? why?
- The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
- The corporate valuation model discounts
free cash flows to the firm (FCFF) by the requiredreturn on equity . - The corporate valuation model can be used to find the value of a division.
- Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.
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