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We talked about the two-stage FCF model in several lectures. Based on class lectures which of these statements are true? Select all that apply. The
We talked about the two-stage FCF model in several lectures. Based on class lectures which of these statements are true? Select all that apply.
The FCFs are discounted at the cost of equity if the firm has no debt.
If a constant growth formula is used in the second stage then the second-stage growth rate can't be very large because the growth rate is perpetual.
The first stage growth rate is likely higher than the second stage growth rate.
The two-stage model is generally used to model the cash flows at young and fast growing firms.
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