Which of the following is incorrect? A. An implied share price which is above the current...

Which of the following is incorrect?

	A.	An implied share price which is above the current share price indicates that the shares are selling at a discount.
	B.	In an unlevered DCF, the WACC is the appropriate discount rate because we are discounting free cash flows that belong to all providers of capital.
	C.	The DCF model assumes a constant WACC throughout.
	D.	The terminal value has minimal impact in the calculation of enterprise value.

Expert Solution

The incorrect statement is:-

B) In an unlevered DCF, the WACC is the appropriate discount rate because we are discounting free cash flows that belong to all providers of capital.

The appropriate discount rate to be used is the discount rate without the effects of debt.

ekkarill92 answered 2 years ago

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