3. To determine the weighted average cost of capital (WACC) used in the DFC valuation method, the interest rate on a ten-year Spanish sovereign bond on the valuation date (1.61%) has been used as the risk-free rate. If the other WACC parameters (Beta and effective tax rate) remained the same, what effect would the consideration of a higher risk-free rate have had on the valuation?

a. The valuation is maintained. There is no change.

b. The valuation of the company goes up.

c. The valuation of the company goes down.

d. It is impossible to determine.

4. Indicate which of the advantages mentioned is NOT true for the DFC method:

a. It takes risk into account in the valuation thanks to Beta.

b. It allows you to discover the businesss cash generation capacity.

c. It is relatively easy for analysts to calculate projections.

d. It allows the valuation of the company when there are no comparable businesses.

5. What effect does an increase in the Beta used have on the company if all other factors remain the same?

a. The valuation is maintained. There is no change.

b. The valuation of the company goes up.

c. The valuation of the company goes down.

d. It is impossible to determine.