31 Two frameworks used for valuation are intrinsic valuation - perpetuity method (DCF) and relative valuation - Exit EBITDA Multiple method -...

31 Two frameworks used for valuation are intrinsic valuation - perpetuity method (DCF) and relative valuation - Exit EBITDA Multiple method - (Comps). Which of the following statements is not correct.

A.Relative valuation is derived by comparing a company to its comparable peers.

B.Because the DCF model rarely yields the same value as the Comps model, the DCF model is viewed as having less value when analyzing a firm.

C.In comps, values are typically compared relative to a measure of the firm's profitability. These ratios are called "multiples".

D.DCF is derived from the fundamental analysis of the company's cash flow generation potential.

32 There are two main valuation types: relative (based on what other companies are worth) and intrinsic (based on how much cash flow the company generates). Which of the following choices is an example of INTRINSIC valuation?

A.Leveraged Buyout (LBO) Model

B.Precedent Transactions

C.Public Company Comparables

D.Discounted Cash Flow (DCF)

33 Which of the following is NOT correct?

A.Rather than treating cash as an operating asset, it is netted against debt to get net debt.

B.Operating assets are usually all assets except for cash and investment assets.

C.Operating liabilities are usually all liabilities except for debt and debt-like liabilities.

D.Enterprise value + net debt = equity value.

43 To calculate interest expense in the future, you should do which of the following?

A.Apply a current interest rate times the average debt balance over the course of the year.

B.Apply a weighted average interest rate times the beginning debt balance.

C.None of the answers listed are correct.

D.Apply a weighted average interest rate times the average debt balances for the year.