Projected free cash flows should be discounted at the firm's weighted average cost of capital to find the firm's total corporate value.

Question

Quizplus · Accepted Answer

This is the correct method for calculating a firm's total corporate value using discounted cash flow analysis. The weighted average cost of capital represents the cost of financing the firm's operations, and therefore is an appropriate discount rate to use when determining the present value of its future cash flows.

Projected Free Cash Flows Should Be Discounted at the Firm's