What are the three standard approaches to valuation under leverage?

Question

Quizplus · Accepted Answer

The three standard approaches to valuation under leverage are Adjusted Present Value (APV), Flow-to-Equity (FTE), and Weighted Average Cost of Capital (WACC). Option D lists all three of these approaches. Option A lists three different models for calculating expected returns, Option B and E list methods for evaluating investments but do not pertain specifically to valuing companies under leverage. Option C lists the Arbitrage Pricing Theory (APT), which is an alternative to the Capital Asset Pricing Model (CAPM), and therefore, not one of the standard approaches to valuation under leverage.

What Are the Three Standard Approaches to Valuation Under Leverage