Question #103
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 48
Status: Unattempted
Question
Free cash flow to the firm valuation uses which discount rate?
Answer Choices:
A. Cost of equity
B. After-tax cost of debt
C. Weighted average cost of capital
Explanation
Free cash flow to the firm valuation uses the opportunity cost relevant to the overall firm,
which is the weighted average cost of capital.