Answer the following statements true (T) or false (F)
1. The free cash flow valuation model can be used to determine the value of an entire company as the present value of its expected free cash flows discounted at the firm's weighted average cost of capital.
2. The free cash flow valuation model is based on the same principle as the P/E valuation approach; that is, the value of a share of stock is the present value of future cash flows.
3. The free cash flow valuation model is based on the same principle as dividend valuation models; that is, the value of a share of stock is the present value of future cash flows.
4. In valuation of common stock, the price/earnings multiple approach usually produces higher valuations than the book or liquidation values since it considers expected earnings.
5. The common stock book value model ignores a firm's expected earnings potential and generally lacks any true relationship to the firm's value in the marketplace.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. TRUE
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If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:
A. A decrease of $30,000. B. An increase of $80,000. C. An increase of $25,000. D. A decrease of $80,000. E. An increase of $30,000.
U.S. GAAP treatment of a defined benefit pension plan requires employers to recognize the funded status as _____, if the pension plan(s) is/are overfunded and _____, if the pension plan(s) is/are underfunded, and an adjustment to Other Comprehensive Income, a shareholders' equity account that is _____, for the offsetting amount
a. an asset; a liability; not part of net income b. an asset; a liability; part of net income c. a liability; an asset; not part of net income d. a liability; an asset; part of net income e. none of the above
_____ is the series of decisions advertisers make regarding the selection and use of media, allowing the marketer to optimally and cost-effectively communicate the message to the target audience
a. Promotional implementation b. Media mix c. Media planning d. Market segmentation
Is mental imagery just a fad, or is there good evidence that it works? Describe the major evidence in the text about the validity of mental imagery.
What will be an ideal response?