The Value of Human Capital Is Determined By

question 11

Multiple Choice

The value of human capital is determined by:

• A) special team of experts in each college and university.
• B) a ranking system of the relative value of different sorts of education to society.
• C) the forces of supply and demand in the market.
• D) an investment board at the New York Stock Exchange.

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Definitions:

FCFF Valuation Model

The FCFF Valuation Model estimates a company's value by using its Free Cash Flow to the Firm (FCFF), discounting the cash flows to their present value using the weighted average cost of capital.

WACC

Weighted Average Cost of Capital; the average rate of return a company is expected to pay its security holders to finance its assets, integrating debt and equity.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

FCFE Valuation Model

Free Cash Flow to Equity (FCFE) Valuation Model estimates the value of a company by calculating the present value of its expected future cash flows available to shareholders, after deducting operational expenses, taxes, and reinvestment needs.