5. Relative valuation: A. sustains productive capacity and provide for growth firms invest in long-lived assets or capital expenditures. B. considers discount rate determination and the cost of capital for the firm as a whole. C. using market comparables: technique used to value businesses, business units, and other major investments. D. equals future cash flows. 6. What is a disadvantage of using EBITADA multiple? A. EBITDA provides a good measure of the before-tax cash flows that are generated by the firm's existing assets B. EBITDA multiples provide a good valuation tool for businesses in which most of the value comes from a firm's existing assets. C. Cannot be determined from the information from firms. D. EBITDA measures only the earnings of the firm's assets already in place, it ignores the value of the firm's new investments. 7. The P/E ratio is widely recognized and used by investors and is the most familiar valuation measure used today because: A. Equity analysts tend to focus their attention on estimating the eamings of the firms they evaluate, and then use the price-to-earnings (P/E) ratio to evaluate the price of the common stock. B. it is typically attributed to the fact that the shares of privately held firms are less liquid (i.e., harder to sell) than those of public firms. C. determining nonrecurring items are easy. D. it significantly overstates the firm's free cash flow, and vice versa. 8. Enterprise value represents the present value of future cash flows in two segments: A. present value of cash flows and cost of capital B. Planning period and Adjusted Present Value (APV) C. Planning period and Terminal period D. NPV and Terminal period