The Present Value of the Free Cash Flows Discounted at the Unlevered

question 25

True/False

The present value of the free cash flows discounted at the unlevered cost of equity is the value of the firm's operations if it had no debt.

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Definitions:

Subsidiary Corporation

A corporation wholly owned by another corporation (the parent corporation).

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Consolidation

The process of combining assets, liabilities, and other financial items of two or more entities into one.

Corporations

Legal entities that are separate from their owners, offering limited liability to its shareholders, and created under corporate law.