The WACC Approach to Valuation Is Not as Useful as the APV

question 50

Multiple Choice

The WACC approach to valuation is not as useful as the APV approach in LBO because:

• A) there is greater risk with a LBO.
• B) the capital structure is changing over time.
• C) there is no tax shield with the WACC.
• D) the value of the levered and unlevered firms are equal.

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