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13.          Which of the following is true of the equity valuation model?                 a.      &nbsp

13.          Which of the following is true of the equity valuation model?

                a.             Discounts free cash flow to the firm by the weighted average cost of capital

                b.             Discounts free cash flow to equity by the cost of equity

                c.             Discounts free cash flow the firm by the cost of equity

                d.             Discounts free cash flow to equity by the weighted average cost of capital

                e.             None of the above

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Answer #1

Discounts free cash flows to equity by the cost of equity

Option B is true of the equity valuation model. Other options are wrong.

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