The Flow-To-Equity Method Uses

question 53

Multiple Choice

The flow-to-equity method uses

• A)cash flows to equity, after interest and after taxes, and the cost of equity capital as the discount rate.
• B)the cost of equity capital as the discount rate and the weighted average cost of capital for discount rate.
• C)cash flows to equity, after interest and after taxes, and the weighted average cost of capital for discount rate.
• D)the cost of equity capital as the discount rate and after-tax cash flows without considering interest and dividend payments.

---

Definitions:

Labor Market

A marketplace where employers and employees interact concerning the exchange of labor for compensation.

Compensating Differentials

Salary differences that reflect the desirability of the job itself or the cost of living in the area where the job is located.

Wage Disparity

The difference in wages between groups of workers, often based on gender, age, or race.

Wage Differentials

The differences in wage rates due to the variations in the skill level, occupation, region, and other factors affecting compensation.