The Adjusted Present Value Method (APV),the Flow to Equity (FTE)method,and

question 28

Multiple Choice

The adjusted present value method (APV) ,the flow to equity (FTE) method,and the weighted average cost of capital (WACC) method produce equivalent results,but each can have difficulties making computation impossible at times.Given this,which one of these is a correct statement?

• A)The WACC method is preferred when evaluating a leveraged buyout.
• B)The APV method is the most commonly used method in actual practice.
• C)Use the FTE method when the level of debt is known over a project's life.
• D)Use the WACC method when the level of debt is known over a project's life.
• E)The WACC method is appropriate when the target debt-to-value ratio applies over a project's life.

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Definitions:

Double Variable

A type of variable in programming that can hold a double-precision 64-bit IEEE 754 floating point.

Equivalent

Describes entities that are equal in value, function, or meaning even if they are not the same object or instance.

Variable

A symbolic name associated with a value and whose associated value may be changed during the course of program execution.

Implicit Type Coercion

The automatic conversion of a value from one data type to another by the compiler, often for compatibility in operations.