The Most Appropriate Discount Rate to Use When Applying the Operating

question 70

Multiple Choice

The most appropriate discount rate to use when applying the Operating Free Cash Flows model is the firm's

• A) Required rate of return based on the capital asset pricing model (CAPM)
• B) Required rate of return based on the dividend discount model (DDM)
• C) Weighted average cost of capital (WACC)
• D) Historical cost of debt and equity
• E) All of the above are appropriate depending on the situation

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