Firm Value Is Calculated by Adding Expected Cash Flow to the Firm's

question 146

True/False

Firm value is calculated by adding expected cash flow to the firm's cost of capital under each capital structure.

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Definitions:

Short Run

A period in economic theory during which at least one factor of production is fixed, limiting the capacity to adjust to changes in market demand.

Elastic

Describes a situation where the quantity demanded or supplied of a good is sensitive to changes in price.

Short Run

A period in economics during which the quantity of at least one input (such as plant size) is fixed and cannot be changed.

Long Run

A period in economics sufficient for all markets to adjust to equilibrium, including the adjustment of all production factors and prices of inputs.