Chapter IV: Discounted Cash Flows

Chapter IV: Discounted Cash Flows

University

47 Qs

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Chapter IV: Discounted Cash Flows

Chapter IV: Discounted Cash Flows

Assessment

Quiz

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University

Practice Problem

Easy

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47 questions

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1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

How does the discounted cash flow method value a company?

By calculating the present value of future cash flows

By estimating future sales

By comparing with similar companies

By analyzing past performance

2.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

What does the Discounted Cash Flow (DCF) method value an asset based on?

The current market price

The present value of expected future cash flows

Historical performance

Asset depreciation

3.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

What is the discount rate typically referred to in DCF analysis?

Market rate

Risk-free rate

Weighted average cost of capital (WACC)

Cost of equity

4.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

What will a higher discount rate result in?

A higher net present value

A lower net present value

Increased cash flows

Decreased cash flows

5.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

In DCF, what does free cash flow represent?

Cash available after investments

Total revenue

Cash after tax

Operating cash flow

6.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which variable affects the DCF calculation the most?

Cash flow estimates

Discount rate

Time period

Market conditions

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

What is the final step in a DCF analysis?

Estimating future cash flows

Summing the present value of future cash flows

Determining the growth rate

Evaluating the risks

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