Question
Which of the following statements is FALSE? a. The present value of the projects free cash flow to equity can be smaller than the levered
Which of the following statements is FALSE?
a. The present value of the projects free cash flow to equity can be smaller than the levered value of the project we computed using the WACC and APV methods. b. When we use the flow-to-equity (FTE) valuation method, we value a project based on its free cash flow to equity, which is different from the free cash flow used in the WACC method. c. When we use the adjusted present value (APV) valuation method, we can use the after-tax WACC as the unlevered cost of capital. d. The APV valuation method can be used if the firm maintains a target leverage ratio.
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