Which of the Following Statements Is NOT CORRECT

question 70

Multiple Choice

Which of the following statements is NOT CORRECT?

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

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Definitions:

Fixed-Interval

A schedule of reinforcement where the first response after a specified amount of time has elapsed is rewarded.

Fixed Mindset

The belief that one's abilities, intelligence, and talents are fixed traits and cannot be significantly developed or improved.

Growth Mindset

The belief that abilities and intelligence can be developed through dedication and hard work, emphasizing the importance of effort and resilience.

Instinctive Drift

"The tendency of animals to revert to instinctive behavior that interferes with learning."