Which of the Following Statements Is FALSE

question 99

Multiple Choice

Which of the following statements is FALSE?

• A)In the flow-to-equity valuation method,the cash flows to equity holders are then discounted using the weighted average cost of capital.
• B)In the WACC and APV methods,we value a project based on its free cash flow,which is computed ignoring interest and debt payments.
• C)In the flow-to-equity (FTE)valuation method,we explicitly calculate the free cash flow available to equity holders taking into account all payments to and from debt holders.
• D)The first step in the FTE method is to determine the project's free cash flow to equity (FCFE).

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Definitions:

Commodity Money

Money whose value comes from a commodity of which it is made, such as gold or silver, with intrinsic value.

Inflation

The rate at which the general level of prices for goods and services is rising, leading to a decrease in purchasing power.

Open Market Committee

A committee within the Federal Reserve that is responsible for overseeing the country's open market operations, including the buying and selling of government securities to manage the money supply and influence interest rates.

Board of Governors

A governing body, often of a bank, organization, or college, responsible for overseeing its management and operations.