Question
Which of the following statements is (are) most likely TRUE: I. If interest expense increases, FCFF will increase, but FCFE stay the same (Note: Assume
Which of the following statements is (are) most likely TRUE: I. If interest expense increases, FCFF will increase, but FCFE stay the same (Note: Assume taxes >0)
II. In theory, FCF models should provide the same estimate of intrinsic value as DDM models, but in practice, the estimate of intrinsic value can vary between the two models (sometimes substantially!)
III. If management plans to change the companys depreciation schedule (e.g. from straight line to accelerated), CFO will not change because depreciation is a non-cash charge a) I
b) II
c) III
d) I, II, III
e) None of the statements
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