Question

Under the free cash flow approach to valuation: share value equals the present value of all free cash flows. share value is found by subtracting the value of debt and preferred stock from the enterprise value. the enterprise value is found by discounting free cash flows at the required return on equity. the share value is found by multiplying free cash flows by the firm's weighted average cost of capital. none of the above.

Answer 1

The correct answer is option A.

Step-by-step explanation:

The present value of all free cash flows gives the share value under the free cash flow approach to valuation. It is also called a discounted cash flow valuation.