Question #123
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 61
Status: Unattempted
Question
The value of stock under the two-stage FCFE model will be equal to:
Answer Choices:
A. present value (PV) of FCFE during the extraordinary growth period plus the terminal value
B. present value (PV) of FCFE during the extraordinary growth and transitional periods plus the PV of terminal value
Explanation
The value of stock under the two-stage FCFE model will be equal to the present value of
FCFE during the extraordinary growth period plus the present value of the terminal value
at the end of this period.