Question 22 (2 points)

Which of the following statements is NOT true?

Question 22 options:

Errors in estimating the expected long-term growth rate can lead to serious errors in valuation

The value of equity is obtained by discounting residual cash flows after meeting all expenses, taxes, interest, and principal debt payments, at the cost of capital

The dividend discount model is a specialized case of equity valuation, where the value of equity is equated to the present value of expected future dividends

The discount rate used in valuation should reflect the riskiness and the type of cash flow being discounted