Which of the Following Statements Is FALSE

question 68

Multiple Choice

Which of the following statements is FALSE?

• A)The long-run growth rate g_FCF is typically based on the expected long-run growth rate of the firm's revenues.
• B)Because the firm's free cash flow is equal to the sum of the free cash flows from the firm's current and future investments,we can interpret the firm's enterprise value as the total NPV that the firm will earn from continuing its existing projects and initiating new ones.
• C)If the firm has no debt then r_wacc = the risk-free rate of return.
• D)When using the discounted free cash flow model,we forecast the firm's free cash flow up to some horizon,together with some terminal (continuation)value of the enterprise.

---

Definitions:

Inventory

The complete list of items such as property, goods in stock, or the contents of a building.

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the product's cost.

Closing Inventory

The value of the goods remaining unsold at the end of an accounting period, which becomes the opening inventory for the next period.

Finished Goods

Goods that have gone through the entire manufacturing cycle and are prepared for customer acquisition.