Which of the Following Statements About Valuing a Firm Using

question 30

Multiple Choice

Which of the following statements about valuing a firm using the APV approach is most CORRECT?

• A) The value of operations is calculated by discounting the horizon value, the tax shields, and the free cash flows at the cost of equity.
• B) The value of equity is calculated by discounting the horizon value, the tax shields, and the free cash flows at the cost of equity.
• C) The value of operations is calculated by discounting the horizon value, the tax shields, and the free cash flows before the horizon date at the unlevered cost of equity.
• D) The value of equity is calculated by discounting the horizon value and the free cash flows at the cost of equity.
• E) None of the statements above is correct.

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