Which of the Following Statements Is CORRECT

question 12

Multiple Choice

Which of the following statements is CORRECT?

• A) two firms with the same expected free cash flows and growth rates must also have the same value of operations.
• B) it is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.
• C) if a company has a weighted average cost of capital wacc = 12%, and if its free cash flows are expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.
• D) the value of operations is the present value of all expected future free cash flows, discounted at the free cash flow growth rate.
• E) the constant growth model takes into consideration the capital gains investors expect to earn on a stock.

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Definitions:

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A concept in psychology that examines why and how individuals comply with orders or directions from authority figures.

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A societal approach that recognizes, values, and promotes cultural diversity, advocating for the coexistence of different cultural identities.

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