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Don't know the answer, clicked it automatically 9. Which of the following is true about the Convergence Model for calculating the terminal value: It should
Don't know the answer, clicked it automatically
9. Which of the following is true about the Convergence Model for calculating the terminal value: It should be used when a company is expected to maintain a long-term competitive advantage. It assumes that the return on new investments are roughly equal to the weighted average cost of capital in the long-run. It is the most suitable formula for companies with high brand value, such as Coca Cola or Heineken. O It accounts for long-term value creating growth. 10. Why are the operating taxes in the FCF analysis calculated without taking into account the tax shield on interest? Taxes are not considered operating costs. Tax benefits of debt financing are already accounted for through the WACC. Taxes can be reclaimed by companies. O The tax rate is different in each countryStep by Step Solution
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