The Most Appropriate Discount Rate to Use When Applying a FCFE

question 53

Multiple Choice

The most appropriate discount rate to use when applying a FCFE valuation model is the

• A) required rate of return on equity.
• B) WACC.
• C) risk-free rate.
• D) None of the options are correct.

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Definitions:

Merchant Offeror

A seller or provider of goods and services who presents an offer in a commercial transaction, especially one with expertise or professional standing in the transaction's subject matter.

Firm Offer

an offer in contract law that remains valid for a certain period of time and cannot be withdrawn during that period by the offeror.

Written Offer

A formal proposal presented in written form, detailing the terms under which the offeror is willing to engage in a transaction or agreement.

Complete

Fully executed or finished with all necessary components or steps fulfilled.