A Key Difference Between the APV, WACC, and FTE Approaches

question 39

Multiple Choice

A key difference between the APV, WACC, and FTE approaches to valuation is:

• A) how the unlevered cashflows are calculated.
• B) how the ratio of debt to equity is determined.
• C) how the initial investment is treated.
• D) whether terminal values are added or not.
• E) whether debt effects should be considered.

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Definitions:

ANOVA

ANOVA, or Analysis of Variance, is a statistical method used to test differences between two or more means by analyzing variation within and between groups.

Means

Refers to the arithmetic average of a set of numbers, calculated as the sum of the numbers divided by the count of those numbers.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect exists among the tested groups or variables.

Chi-Square Test

A statistical test used to determine if there is a significant difference between observed frequencies and expected frequencies in categorized datasets.