Question
Please mark the only correct statement about the three main valuation methods used in capital budgeting: a. the WACC method is easier to apply than
Please mark the only correct statement about the three main valuation methods used in capital budgeting:
a. | the WACC method is easier to apply than the APV method when the firm does not maintain a constant debt-equity ratio (D/V does not enter calculation) | |
b. | the WACC method can be used when the debt to equity ratio is changing over time | |
c. | The FTE (flow-to-equity) is easier to use because we do not have to adjust the FCFs for interest payments and changes in the firms net debt | |
d. | the APV method must add the PV of the Interest Tax Shield because this method uses the unlevered cash flows to obtain VU |
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