1. Which of the following statements is corrrect?

   a.

   The corporate valuation model discounts free cash flow to equity by the weighted average cost of capital

   b.

   The interest tax shields are estimated separately in the flow to equity method

   c.

   The interest tax shields are discounted at the weighted average cost of capital in the APV model

   d.

   The interest tax shields are discounted at the unlevered cost of equity in the APV method

   e.

   The APV model assumes contstant capital structure

   1. The Free cash Flow to Equity valuation method differs from the Corporate Valuation method because:

      a.

      The Free Cash Flow to Equity method discounts present value of dividends rather than Free Cash Flows to the Firm

      b.

      The Free Cash Flow to Equity method uses a discount rate which is lower that the WACC used in the Corporate Valuation model

      c.

      The Free Cash Flow to Equity method provides an estimate of the value of equity rather than value of operations.

      d.

      The Free Cash Flow to Equity Method is more accurate

      e.

      The Free Cash Flow to Equity Method estimates value of business and financing cash flows separately.

      1. Which of the following statements is correct

         	a.	The cost of levered equity is alwys lower than the weighted average cost of capital
         	b.	The cost of levered equity is always lower than the pre-tax weighted average cost of capital
         	c.	Discounting Free cash flows to the firm by pre-tax WACC produces a higher valuation than when the discount rate is the WACC
         	d.	The cost of levered equity is always higher than the WACC
         	e.	The cost of debt is higher than pre-tax WACC