Question
What is the biggest disadvantage of using the Free Cash Flow to the Firm (FCFF) valuation approach as compared to the Free Cash Flow to
What is the biggest disadvantage of using the Free Cash Flow to the Firm (FCFF) valuation approach as compared to the Free Cash Flow to Equity (FCFE) approach?
a. Too much focus on pre-debt cash flows can blind the user to possible survival problems
b. FCFF approach easily incorporates the costs and benefits of borrowing
c. FCFE approach can be applied to more situations than the FCFF approach
d. FCFF approach is too simple to apply
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Horngrens Financial and Managerial Accounting
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
4th Edition
978-0133251241, 9780133427516, 133251241, 013342751X, 978-0133255584
