When Conducting Discounted Cash Flow (DCF)valuation Using Free Cash Flow

question 37

Multiple Choice

When conducting discounted cash flow (DCF) valuation using free cash flow to equity, the appropriate discount rate is:

• A)Weighted average cost of capital of the target firm
• B)Risk-adjusted cost of equity of the target firm
• C)Risk-adjusted cost of equity of the acquiring firm
• D)Weighted average cost of capital of the acquiring firm

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Definitions:

Delayed Sleep Phase Syndrome

This syndrome is a circadian rhythm disorder where an individual's sleep is delayed by two or more hours, causing difficulty in waking up at conventional times.

Circadian Rhythms

Biological processes that display an endogenous, entrainable oscillation of about 24 hours, regulating the sleep-wake cycle among other bodily functions.

Advanced Sleep Phase Syndrome

A circadian rhythm disorder characterized by earlier than desired sleep onset and wake times, often resulting in evening sleepiness and morning alertness.

Biological Rhythm

Natural cycles of physical, emotional or mental activity in living beings, often aligned with daily, tidal, seasonal, or lunar cycles.