Which of the Following Statements About Valuing a Firm Using

question 16

Multiple Choice

Which of the following statements about valuing a firm using the APV approach is most CORRECT?

• A) The horizon value is calculated by discounting the free cash flows beyond the horizon date and any tax savings at the cost of debt.
• B) The horizon value is calculated by discounting the expected earnings at the WACC.
• C) The horizon value is calculated by discounting the free cash flows beyond the horizon date and any tax savings at the WACC.
• D) The horizon value must always be more than 20 years in the future.
• E) The horizon value is calculated by discounting the free cash flows beyond the horizon date and any tax savings at the levered cost of equity.

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