The Flow to Equity Method Provides an Accurate Estimate of the Value

question 49

Multiple Choice

The flow to equity method provides an accurate estimate of the value of a firm if:

• A) debt-equity ratio remains constant for the life of the firm
• B) amount of debt remains constant for the life of the firm
• C) free cash flows remain constant for the life of the firm
• D) the financial leverage changes significantly over the life of the firm

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