Question
Which of the following statements is NOT CORRECT? A) The constant growth model cannot be used for a zero growth stock, where free cash flows
Which of the following statements is NOT CORRECT?
A) The constant growth model cannot be used for a zero growth stock, where free cash flows are expected to remain constant over time.
B) An important step in applying the free cash flow valuation model is forecasting the firm's pro forma financial statements.
C) The free cash flow valuation model can be used both for companies that pay dividends and those that do not pay dividends.
D) Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.
E) The free cash flow valuation model can be used to find the value of a division.
F) The free cash flow valuation model discounts free cash flows by the required return on equity.
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