Which of the Following Mathematical Expressions Reflects the Value of a Firm

question 31

Multiple Choice

Which of the following mathematical expressions reflects the value of a firm using the income approach?

• A) The present value of the free cash flows (FCF) that a business is expected to produce over the next T years + The present value of all free cash flows after year T + The value of all of the nonoperating assets in the firm
• B) The present value of the free cash flows (FCF) that a business is expected to produce over the next T years - The present value of all free cash flows after year T - The value of all of the nonoperating assets in the firm
• C) The present value of the free cash flows (FCF) that a business is expected to produce over the next T years + The present value of all free cash flows after year T - The value of all of the nonoperating assets in the firm
• D) The present value of the free cash flows (FCF) that a business is expected to produce over the next T years - The present value of all free cash flows after year T + The value of all of the nonoperating assets in the firm

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Definitions:

Measurement of NCI

The process of determining the value of non-controlling interests in a subsidiary, which are not owned by the parent company.

Date of Acquisition

The specific date on which control of assets and liabilities transfers from one entity to another in a business combination.

Investment

An investment refers to an asset or item acquired with the goal of generating income or appreciation in value over time.

Impaired

Refers to assets that are recognized at a value higher than their recoverable amount, leading to an impairment loss that must be recorded.