A Key Difference Between the APV,WACC,and FTE Approaches to Valuation

question 36

Multiple Choice

A key difference between the APV,WACC,and FTE approaches to valuation is:

• A)how the unlevered cash flows are calculated.
• B)how the ratio of equity to debt is determined.
• C)how the initial investment is treated.
• D)whether terminal values are included or not.
• E)how debt effects are considered; i.e.the target debt to value ratio and the level of debt.

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Definitions:

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by the party to be charged, to prevent fraud and perjuries.

Limited Partner

An investor in a partnership who has limited liability to the extent of their investment in the partnership and does not actively manage the business.

Sue

A legal action where an individual or entity brings a lawsuit against another in a court of law.

Certificate of Limited Partnership

A legal document that formalizes the establishment of a limited partnership and outlines its terms.