The constant growth dcf model used to evaluate the

This preview shows page 2 - 5 out of 9 pages.

7)The constant growth DCF model used to evaluate the prices of common stocks is conceptually similar to the model used to find the price of perpetual preferred stock or other perpetuities.
Point
8)According to the nonconstant growth model discussed in the textbook, the discount rate used to find the present value of the expected cash flows during the initial growth period is the same as the discount rate used to find the PVs of cash flows during the subsequent constant growth period.Point
9)Projected free cash flows should be discounted at the firm's weighted average cost of capital to find the value of its operations.Point
10)The corporate valuation model cannot be used unless a company doesn'tpay dividends1 Point
TrueFalseSaved
11)Which of the following statements is CORRECT?1 Point
Saved

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture