True or False

WACC is the appropriate discount rate to use when applying the FCFF valuation method. Two people valuing a company will usually come up with the same value since valuation is very objective. By definition, a Firm's cost of equity is it's Accounting ROE Ed Harding believes that Accounting Payback Period is a poor metric to evaluate projects with. You should NOT use it or recommend its use to your CFO. A publicly traded firm will typically discuss it's optimal capital structure in terms of a targeted credit rating (ANSWER: True per Harding) EVA is a a great measure because it allows you to compare Firms within the same industry. The DCF method would be considered a market approach to valuation Dividend Discount Model is a Free Cash Flow to the Firm method of valuation It is a mistake in finance to rank projects based on their IRR

The cost of equity will be less than the cost of debt when the firm is in Financial Distress Real estate firms will have higher costs of distress than Consulting firms due to the high level of tangible assets (relatively speaking) Repurchasing shares is similar to paying a dividend, but it typically has tax advantages when compared to paying a cash dividend (for shareholders). Andrew Chan deducts Depreciation in his calculation of NOPAT when calculating ROIC. His argument is that Depreciation is a true economic expense. The objective for value creation when looking at ROIC is not to maximize ROIC but to maximize the spread of ROIC over WACC