Which of the Following Statements Is NOT CORRECT

question 10

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
• B) The corporate valuation model discounts free cash flows by the required return on equity.
• C) The corporate valuation model can be used to find the value of a division.
• D) An important step in applying the corporate valuation model is forecasting the firm's pro forma financial statements.
• E) Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

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Definitions:

Scope of Authority

The scope of authority delineates the range of actions or decisions that an individual or entity, such as an employee or agent, is officially empowered to make on behalf of another party or organization.

Undisclosed Principal

A situation in an agency relationship where the identity of the principal is not revealed to the third party by the agent.

Liable

Legally responsible or answerable for an action or a situation.

Scope of Authority

The range or extent of power that an individual or organization legally has to make decisions or take action.