Typed plzzz And Asap Which of the following statement is least likely to be correct?- The WACC is used to find the present value of future cash flows, so it would be inconsistent to use weights based on the past history of the company.- The capital structure weights based on the current market values a good estimate of the capital structure that the company will have on average during thefuture.- A company should use the marginal rate when it estimates its WACC.- Suppose a company's previously issued debt isn't trading at par. In that case, the yield to maturity is a good estimate of the return required to satisfy investors.- The firm should earn on its reinvested earnings at least as much as its stockholders could earn on alternative investments of equivalent risk.

WACC is the weighted average cost of capital. It represents the average cost of capital after tax of…

Answered: Which of the following statement is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 10P

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Profitability index. It is a ratio that provides information about the present value of net cash flows to the net investment. It provides a measure of the relative present value return for each dollar of initial investment. Discuss its usefulness. Should managers rely upon it? Consider its usefulness in a capital rationing situation (capital investment under conditions of financial restraint).
When we compute the EV/EBITDA multiple, i.e. the ratio of Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization, we estimate the enterprise value of a firm by adding the values of debt and equity and netting out cash. Could you provide a reason for netting out cash? O a. Cash can be used to pay down debt. O b. Cash is easy to value. O c. None of the given answers is correct. The income from cash is not part of EBITDA. Cash is liquid. O d. O e.
Projected free cash flows should be discounted at the firm's weighted average cost of capital to find the value of its operations. Is the above statement True or False? Please Explain.
Define the term capital intensity. Explain how a decline in capital intensity would affect the AFN, other things held constant. Would economies of scale combined with rapid growth affect capital intensity, other things held constant? Also, explain how changes in each of the following would affect AFN, holding other things constant: the growth rate, the amount of accounts payable, the profit margin, and the payout ratio.
Which of the following does nor assign a value to a business opportunity using time-value measurement tools? A. internal rate of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. payback period method
The book value is derived by subtracting the total liabilities of a company from its total assets. (True / False) The tools used for valuation can vary among evaluators, businesses, and industries. (True / False) The main difference between the discounted cash flow method and the profit multiplier method is that it takes inflation into consideration to calculate the present value. (True / False) Valuation is the process of estimating how a business will performed in the future. (True / False) kindly answer all
A discounted cash flow approach to valuing a firm, using the weighted average cost of capital as a discount rate, makes sense to use when: a. Financial structure and risk of the investment are relatively stable over time. b. The risk of bankruptcy is high. c. A firm is expected to go through a transition that calls for a high use of debt that will be paid down over a few years. d. Non-GAAP accounting is being used. e. All of the above.
If you do not have past data to generate cash flows forecasting, which approach should you adopt for the valuation of a new non-public company?
1. should the terminal cashflow be used to calculate the net present value of a company? Give reasons for your answer. 2. Calculate the net present value (NPV) with the information in the attached table.
What are some tools that companies have to manage their (net operating) working capital? Provide examples of inventory and receivables management techniques. What is the Cash Conversion Cycle and why is this a useful metric? Are there risks if this is too low?
What does it mean when a company’s free cash flow is negative in one or more years? Do negative values of free cash flow in any way alter or invalidate the notion that a company’s fair market value equals the present value of its free cash flows discounted at the company’s weighted-average cost of capital? Suppose a company’s free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the company’s stock?
True or False The CFROI is a measure of the dollar surplus value created by an investment or a portfolio of investments. The cash flow return on investment (CFROI) for a firm is the internal rate of return on existing investments, based on real cash flows. If the gross investment in existing assets is reduced, the CFROI may be increased.

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