Which of the Following Is Not True About the Constant

question 67

Multiple Choice

Which of the following is not true about the constant growth valuation model?

• A) The firm's free cash flow is assumed to be unchanged in perpetuity
• B) The firm's free cash flow is assumed to grow at a constant rate in perpetuity
• C) Free cash flow is discounted by the difference between the appropriate discount rate and the expected growth rate of cash flow.
• D) The constant growth model is sometimes referred to as the Gordon Growth Model.
• E) If the analyst were using free cash flow to the firm, cash flow would be discounted by the firm's cost of capital less the expected growth rate in cash flow.

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Definitions:

Return Statement

A statement in programming that ends the execution of a function and may return a value to the caller of the function.

Syntax

The set of rules that defines the combinations of symbols that are considered to be correctly structured programs or expressions in a programming language.

Grammar

The set of rules that govern the structure of sentences in a language.

Logic

The branch of philosophy that studies the principles of valid reasoning and argumentation. In computing, it refers to the use of conditional statements and boolean algebra.