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:

Economic Rent

The income earned from the use of resources above what is necessary to keep those resources in their current use.

Real Wages

Salaries recalibrated based on inflation rates to indicate the real value of earnings in terms of buying capacity.

Real Wages

Salaries recalibrated to account for inflation, indicating the actual buying capability of earnings.

Income Earned

Refers to all forms of compensation or remuneration received from employment, including wages, salaries, bonuses, and other earnings.