Which of the Following Statements Is FALSE

question 80

Multiple Choice

Which of the following statements is FALSE?

• A)To estimate a firm's enterprise value,we compute the present value of the free cash flows (FCF)that the firm has available to pay equity holders.
• B)The NPV of any individual project represents its contribution to the firm's enterprise value.
• C)When using the total payout model,we discount total dividends and share repurchases,and use the growth rate in earnings when forecasting the growth of the firm's payout.
• D)In the total payout model,we first value the firm's equity,rather than just a single share.

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Definitions:

Forward Exchange Contract

A financial contract between two parties to exchange currencies at a predetermined future date and rate, used to hedge against foreign exchange risk.

Premium

The amount paid for a product or service above its nominal value, often related to insurance or bonds.

Discount

A reduction from the usual cost of something, or the amount by which an asset's book value is reduced for accounting purposes.

Inception Date

The date on which an agreement, contract, or financial instrument becomes effective.