The corporate valuation model discounts free cash flows

Assignment Help Financial Management
Reference no: EM13877746

Which of the following statements is NOT CORRECT?

The corporate valuation model discounts free cash flows by the required return on equity.

The corporate valuation model can be used to find the value of a division.

An important step in applying the corporate valuation model is forecasting the firm's pro forma financial statements.

Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.

Reference no: EM13877746

Questions Cloud

Two of the major investment markets : Two of the major investment markets in the United States are the New York Stock Exchange and NASDAQ. Explain the major differences between the two, including a discussion of how you would use each to purchase investments.
When used as evidence-what does an effective example do : When used as evidence, what does an effective example do?
What is the value of a bond that has a par value : What is the value of a bond that has a par value of $1,000, a coupon rate of 8.26 (paid annually), and that matures in 30 years? Assume required rate of return on this bond is 8.65 percent
The two most basic components of any investment opportunity : The two most basic components of any investment opportunity are risk and return. Define each and explain how they are related in the investment world. Why does their relationship matter to you as an investor?
The corporate valuation model discounts free cash flows : The corporate valuation model discounts free cash flows by the required return on equity. The corporate valuation model can be used to find the value of a division. An important step in applying the corporate valuation model is forecasting the firm's..
Weighted average cost of capital for use capital budgeting : Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?
Calculate the times interest earned ratio : Calculate the times interest earned ratio for Tierre's Ts, Inc. using the following information. Sales = $200,000, cost of goods sold = $50,000, depreciation expense = $13,000, addition to retained earnings = $70,000, dividends per share = $0.50, tax..
Transactions occurred in the primary market : Which one of the following transactions occurred in the primary market?
What would the investor be willing to pay for the loan : A borrower has secured a 30 year, $150,000 fully amortizing fixed rate loan at 7% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing ..

Reviews

Write a Review

Financial Management Questions & Answers

  Describe how much company spend to buy new fixed assets

During the year, the firm sold assets with a total book value of $13,600 and also recorded $14,800 in depreciation expense. How much did the company spend to buy new fixed assets?

  What are the fundamentals of risk and return

What are the fundamentals of risk and return? How are they relative to standard deviation? How would a financial manager use them?

  Ideas and principles established by the well-known theorist

The ideas and principles established by the well-known theorist F.W. Taylor have implications for both operations and management even today. Describe briefly FIVE of these ideas and principles.

  Interest or discount rate with interest compounded annually

What is the present value of $7,800 received 13 years from now using a 16% interest or discount rate, with interest compounded annually?

  Capital requirements obtained from different sources

The cost of capital may change when there are incremental capital requirements obtained from different sources, resulting in changes in capital structure. What qualitative considerations are important for a company seeking to raise capital? Answer th..

  What is the projects operating cash flow for the first year

The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service. What is the project's operating cash flow for the first year

  Calculate the weighted average cost of capital

Calculate the Weighted Average Cost of Capital given the following information: Target capital structure: 60 percent stock, 30 percent debt, 10 percent preferred stock ; cost of equity is 12 percent; cost of debt is 7 percent; cost of preferred stock..

  Maximum price you should be willing to pay for the bond

Assume that you are considering the purchase of a 20-year, non callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 8.4% nominal yield to maturity on this..

  Find the current dividend on a stock

Find the current dividend on a stock, given that the required return is 9 percent, the dividend growth rate is 6 percent, and the stock price is $50 per share

  Total corporate plus personal rates paid on debt

Suppose that, in an effort to reduce the federal deficit, Congress increases the top personal rate on interest and dividends to 35% but retains a 15% tax rate on realized capital gains. The corporate tax stays at 35%. Compute the total corporate plus..

  Increase a firms cash flow from investing activities

Which of the following would increase a firm's cash flow from investing activities?

  Measure the cost of the common stock

When measuring the cost of capital, many companies measure the cost of the common stock in the company. However, does common stock have a cost when there is no obligation to pay the stockholders except upon liquidation of the company?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd