WACC Is the Most Appropriate Discount Rate to Use When

question 117

Multiple Choice

WACC is the most appropriate discount rate to use when applying a ______ valuation model.

• A)FCFF
• B)FCFE
• C)DDM
• D)A or C depending on the debt level of the firm
• E)P/E

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Definitions:

Distribution

In statistics, the way in which values in a dataset are spread or dispersed across the range of possible values.

Mean

In statistics, it is the average of a set of numbers, calculated by dividing the sum of the values by the count of numbers.

Mode

The value that appears most frequently in a data set.

Median

A statistical measure denoting the middle value in a data set, where half the numbers are above and half below.