Which of the Following Statements Is NOT CORRECT

question 40

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
• B) The corporate valuation model discounts free cash flows by the required return on equity.
• C) The corporate valuation model can be used to find the value of a division.
• D) An important step in applying the corporate valuation model is forecasting the firm's pro forma financial statements.
• E) Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon,or continuing,value.

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Definitions:

Rate

A measure of how quickly or slowly something happens or changes over a particular period of time.

Fetal Hemoglobin

A type of hemoglobin found in fetuses that has a higher affinity for oxygen than the adult form, facilitating oxygen transfer from the mother to the fetus.

Adult Hemoglobin

A type of hemoglobin that is predominant in adults, consisting of two alpha and two beta chains, and responsible for transporting oxygen from the lungs to the rest of the body.

Oxygen Affinity

The tendency of a molecule, such as hemoglobin, to bind with oxygen. A higher affinity means oxygen is more tightly held.