HomeworkLib
Question

The DCF approach can only be used to value a firm if it is an acquisition...

The DCF approach can only be used to value a firm if it is an acquisition target.

True

Flase

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Ans FALSE

The DCF approach can also be used to find the present value of alternative investments so as to make a decision whether to invest or not.

0 0
Add a comment
Know the answer?
Add Answer to:
The DCF approach can only be used to value a firm if it is an acquisition...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • When calculating the value of a firm for an acquisition of a target firm, how should...

    When calculating the value of a firm for an acquisition of a target firm, how should the discount rate for calculating this value be determined?  If there are gains of synergy associated with this acquisition, how will the acquiring firm account for this in their valuation of the target?

  • Using the Adjusted present value (APV) approach: BTR Warehousing, which is considering the acquisition of Globo-Chem...

    Using the Adjusted present value (APV) approach: BTR Warehousing, which is considering the acquisition of Globo-Chem Co., estimates that acquiring Globo-Chem will result in an incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company: Data Collected (in millions of dollars) Year 1 Year 2 Year 3 EBIT $11.0 $13.2 $16.5 Interest expense 3.0 3.3 3.6 Debt 34.1 40.3 43.4 Total net operating capital 105.1...

  • The DCF approach for estimated the cost of retained earnings, rs, is given as follows: Is...

    The DCF approach for estimated the cost of retained earnings, rs, is given as follows: Is = fs = D1/Po + Expected GL Investors expect to receive a dividend yield, Po, plus a capital gain, g, for a total expected return. In -Select- , this expected return is also equal to the required return. It's easy to calculate the dividend yield; but because stock prices fluctuate, the yield varies from day to day, which leads to fluctuations in the DCF...

  • The DCF approach for estimated the cost of retained earnings, rs, is given as follows: s...

    The DCF approach for estimated the cost of retained earnings, rs, is given as follows: s = D1/P0 + Expected gL Investors expect to receive a dividend yield, , plus a capital gain, g, for a total expected return. In -Select-recessionsequilibriumupturnItem 8 , this expected return is also equal to the required return. It's easy to calculate the dividend yield; but because stock prices fluctuate, the yield varies from day to day, which leads to fluctuations in the DCF cost...

  • The pure play approach: Select one: a. Should be used only if a firm has more...

    The pure play approach: Select one: a. Should be used only if a firm has more than three divisions. b. Involves finding comparison companies that focus on the type of project in which we are interested. c. Is most useful when each division makes a multitude of different products. d. Is easier to implement than the subjective approach. e. Cannot be used if the firm has preferred stock outstanding.

  • It will not be a tax-free acquisition. A) If the bidder firm exchanges its own stock...

    It will not be a tax-free acquisition. A) If the bidder firm exchanges its own stock for the target firm's equity. B) If an acquisition is paid for in cash for the target firm's shares. C) If the stockholders in the target firm will retain an equity interest in the bidder. D) If the target firm's shareholders will be considered to have exchanged their old shares for new ones of equal value.

  • Firm B is planning an acquisition of Firm A. The stand-alone value of Firm A is...

    Firm B is planning an acquisition of Firm A. The stand-alone value of Firm A is $560 million, and synergies are estimated to be $85 million. What is the maximum acceptable purchase price Firm B should be willing to pay, and why?

  • ABC Corporation Ltd. is planning to value a firm on the basis of DCF valuation technique....

    ABC Corporation Ltd. is planning to value a firm on the basis of DCF valuation technique. Perform Valuation using below inputs. Year 2019 2020 2021 2022 Growth Rate 8% 15% 15% 10% EBIT (1-t) 300 320 340 230.20 Capex 100 120 130 50 Cost of Equity 13% 13% 13% 13% Cost of Debt 8% 8% 8% 8% Debt Ratio 25 25 25 25 Return on Capital 30 30 30 20

  • "A linear programming approach should ONLY be used when management is sure that they can model...

    "A linear programming approach should ONLY be used when management is sure that they can model ALL the general constraints of the model as linear functions." Do you agree or disagree with this statement? explain why.

  • 1. 2. 3. 4. 5. 6. 7. 5. Merger analys is Adjusted present value (APV) approach...

    1. 2. 3. 4. 5. 6. 7. 5. Merger analys is Adjusted present value (APV) approach Aa Aa BTR Warehousing, which is considering the acquisition of Dual Purposes Products Co. (DPP), estimates that acquiring DPP will result in an incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company: Data Collected (in millions of dollars) Year 1 Year 2 Year 3 EBIT $13.0 $15.6 $19.5...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT