The Flow-To-Equity Method: I. Uses Cash Flows to Equity, After Interest and After

question 59

Multiple Choice

The Flow-to-equity method:
I. uses cash flows to equity, after interest and after taxes
II. uses cost of equity capital as the discount rate
III. uses weighted average cost of capital for discount rate
IV. uses after-tax cash flows without considering interest and dividend payments

• A) I and II only
• B) II and III only
• C) I and III only
• D) II and IV only

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Definitions:

Focal Objects

Core items or subjects in a study or a field of interest that attract primary attention or analysis.

Physical Things

Objects or substances that have a tangible presence and can be perceived through the senses.

Attribution Theory

A psychological theory that attempts to explain how individuals determine the causes of others' behavior, attributing it to internal dispositions or to external situations.

Lazy

Characterized by a lack of effort or unwillingness to expend energy in tasks.