Which of the following statements is FALSE? A) The more cash the firm uses to re

Question

Which of the following statements is FALSE?

A) The more cash the firm uses to repurchase shares, the less it has available to pay dividends.

B) Free cash flow measures the cash generated by the firm after payments to debt or equity holders are considered.

C) We estimate a firm's current enterprise value by computing the present value (PV) of the firm's free cash flow.

D) We can interpret the enterprise value as the net cost of acquiring the firm's equity, taking its cash, and paying off all debts.

Explanation / Answer

Ans:Ans B is false Since free cash flow measures after deduction of debt and not of the equity therefore free cash flow measures the cash generated by the firm after payments to debt or equity holders are cansidered is false.

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