Reading 43: Free Cash Flow Valuation-LOS f 习题精选

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发表于 2011-3-18 14:57 | 只看该作者

The estimate of value from FCFE models will always be different than the value obtained using DDM, if:

A)	FCFE is higher than dividends, and the excess is invested in zero NPV projects.

B)	FCFE is greater than dividends, and the excess is not invested in zero NPV projects.

C)	FCFE is higher than dividends.

The estimate of value from FCFE models will always be different from the value obtained using DDM, if the FCFE is greater than dividends, and the excess cash is not invested in zero NPV projects.

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发表于 2011-3-18 14:58 | 只看该作者

The difference between the value estimate produced by the dividend discount model (DDM) and the one produced by the free cash flow to equity (FCFE) model can be accounted for by which of the following?

A)	Different sales forecast.

B)	Different estimates of model risk.

C)	The value in controlling the firm's dividend policy.

The difference between the value estimate produced by the DDM and the one produced by the FCFE model can be interpreted as the value of controlling the firm's dividend policy.

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发表于 2011-3-18 14:58 | 只看该作者

When FCFE is greater than dividends, the value obtained using FCFE will equal the value obtained using DDM if the:

A)	excess cash is invested in projects with net present value (NPV) of zero.

B)	values will never be equal if FCFE is greater than dividends.

C)	excess cash is invested in projects with positive NPV.

When FCFE is greater than dividends, but the excess cash is invested in projects with zero NPV, the FCFE model and DDM will give same estimates of firm value.

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发表于 2011-3-18 14:59 | 只看该作者

When are the free cashflow to equity (FCFE) model and the dividend discount model (DDM) valuations different? When FCFE:

A)	is greater than dividends and excess cash is invested in projects with a net present value of 0.

B)	equals dividends.

C)	is greater than dividends and excess cash is invested in projects with a positive net present value.

There are two conditions when the valuation derived from the FCFE valuation model will be the same as the value from the Dividend Discount Model Valuation. First, if dividends are identical to FCFE. Second, if FCFE is larger than the dividends yet the excess cash (FCFE minus dividends) is invested in projects with a NPV equal to 0. When the FCFE is greater than the dividends and excess cash (FCFE minus dividends) are invested in projects with a positive NPV, the FCFE model will obtain a greater value than the dividend discount model. Typically, the value produced by the FCFE model exceeds the value produced by the dividend discount model with the difference considered to be the value in controlling the firm’s dividend policy.