WACC Is the Most Appropriate Discount Rate to Use When

question 22

Multiple Choice

WACC is the most appropriate discount rate to use when applying a ______ valuation model.

• A) FCFF
• B) FCFE
• C) DDM
• D) FCFF or DDM, depending on the debt level of the firm,
• E) P/E

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Definitions:

Hematoma

A tumor or swelling that contains blood.

Plunger

A tool used to clear blockages in pipes and drains, consisting of a rubber suction cup attached to a stick.

Syringe

A medical instrument used to inject or withdraw fluids from the body.

Barrel

A cylindrical container traditionally made of wooden staves bound by iron hoops, used for storing and transporting liquids like wine, oil, and beer.