In order to increase a firm's market value to match the current market value of a firm's stock, you might

Question

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The market value of a firm's stock is largely determined by the discounted value of the firm's expected cash flows. Therefore, increasing the expected cash flows and the growth rate of those cash flows will increase the market value of the firm's stock. Increasing the firm's cost of capital would have the opposite effect, decreasing the market value of the firm's stock. Therefore, choices A and B are the best options for increasing the firm's market value to match the current market value of its stock. Both increasing the expected cash flows and the expected growth rate of the firm's cash flows can lead to an increase in the firm's market value. This is because the value of a company is ultimately based on its expected future cash flows, and increasing those cash flows and their expected growth rate should increase the firm's value. Increasing the firm's cost of capital, on the other hand, would decrease the firm's value as it would increase the discount rate used to calculate the present value of its cash flows.

In Order to Increase a Firm's Market Value to Match