Which of the Following Statements Is FALSE

question 11

Multiple Choice

Which of the following statements is FALSE?

• A) The long-run growth rate gFCF is typically based on the expected long-run growth rate of a firm's revenues.
• B) Since a firm's free cash flow is equal to the sum of the free cash flows from the firm's current and future investments, we can interpret the firm's enterprise value as the total net present value (NPV) that the firm will earn from continuing its existing projects and initiating new ones.
• C) If a firm has no debt, then rwacc equals the risk-free rate of return.
• D) When using the discounted free cash flow model, we forecast a firm's free cash flow up to some horizon, together with some terminal (continuation) value of the enterprise.

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Definitions:

Chesapeake Politically Unstable

Refers to a period of political instability in the Chesapeake region, historically marked by conflicts and governance issues.

Virginia

A state located on the East Coast of the United States, known for its significant history, including being one of the original 13 colonies.

Maryland

A state located in the Mid-Atlantic region of the United States, known for its rich history and diverse geography.

Colonial Governments

Administrative bodies established by colonial powers to oversee and manage colonies, often involving control over local resources, economy, and people.