In Calculating the NPV Using the Flow-To-Equity Approach the Discount

question 3

Multiple Choice

In calculating the NPV using the Flow-To-Equity approach the discount rate:

• A) is the all equity cost of capital.
• B) is the cost of equity for the levered firm.
• C) is the all equity cost of capital minus the weighted average cost of debt.
• D) is the weighted average cost of capital.
• E) is the all equity cost of capital plus the weighted average cost of debt.

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