Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A)The long-run growth rate gFCF is typically based on the expected long-run growth rate of the firm's revenues.
• B)Because the firm's free cash flow is equal to the sum of the free cash flows from the firm's current and future investments,we can interpret the firm's enterprise value as the total NPV that the firm will earn from continuing its existing projects and initiating new ones.
• C)If the firm has no debt then rwacc = the risk-free rate of return.
• D)When using the discounted free cash flow model,we forecast the firm's free cash flow up to some horizon,together with some terminal (continuation)value of the enterprise.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded; also known as the market-clearing price.

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Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, usually downward-sloping to indicate that demand decreases as price increases.