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The Flow to Equity Method Provides an Accurate Estimate of the Value

Question 38

Multiple Choice

The flow to equity method provides an accurate estimate of the value of a firm if:


A) debt-equity ratio remains constant for the life of the firm
B) amount of debt remains constant for the life of the firm
C) free cash flows remain constant for the life of the firm
D) the financial leverage changes significantly over the life of the firm

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