The Most Appropriate Discount Rate to Use When Applying a FCFF

question 114

Multiple Choice

The most appropriate discount rate to use when applying a FCFF valuation model is the ___________.

• A)required rate of return on equity
• B)WACC
• C)risk-free rate
• D)A or C depending on the debt level of the firm
• E)none of the above

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Definitions:

Bind

To legally obligate oneself or another party to a contract or agreement, making it enforceable by law.

Illusory

Pertaining to an agreement or promise that lacks real consideration or enforceability, making it seem valid but without substance.

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Electronic games played through consoles, computers, or mobile devices, characterized by interactive gameplay and visual feedback.

Promise

A promise is a declaration or assurance that one will or will not do something, often creating an expectation or obligation.