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777dan777 [17]
3 years ago
7

Which of the following statements is CORRECT?

Business
1 answer:
Anna11 [10]3 years ago
8 0

Answer:

a.To implement the corporate valuation model, we discount projected free cash flows at the weighted average cost of capital.

Explanation:

Common sense requires that like should be compared like, the free cash flows are meant for all providers of finance, debt, and equity stockholders alike, hence, in discounting the free cash flows to firm, the discount rate is the one that captures the overall cost of finance to the firm which is the weighted average cost of capital, hence, option "a" is correct.

Net income and NOPAT cannot be discounted since they are not  cash flows

In the same vein,the free cash flows which are meant for debtholders and stockholders cannot be discounted at the cost of equity which is only an equity required rate of return

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4 years ago
How would utility costs be properly classified? Select one: A. Curvilinear B. Fixed C. Variable D. Stepped E. Mixed
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Answer: Mixed

Explanation:

Here is the complete question:

Max Machining incurs the following utilities costs at different levels of production:

0 units: $120

500 units: $2,620

1,000 units: $5,120

How would utility costs be properly classified?

A) Curvilinear

B) Variable

C) Mixed

D) Fixed

E) Stepped

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