Question #66
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 32
Status: Unattempted
Correct Answer: A
Question
Which of the following statements about the three-stage FCFE model is most accurate?
Answer Choices:
A. There is a transition period where the growth rate declines
B. There is a final phase when growth rate starts to decline
C. There is a transition period where the growth rate is stable
Explanation
In the three-stage FCFE model, there is an initial phase of high growth, a transition period
where the growth rate declines, and a steady-state period where growth is stable.