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True or False -Reinvestment rate (IR) multiplied by the return on invested capital (ROIC) and Compound Annual Growth Rate (CAGR) are both ways to calculate the same growth rate
True or False
-Reinvestment rate (IR) multiplied by the return on invested capital (ROIC) and Compound Annual Growth Rate (CAGR) are both ways to calculate the same growth rate.
-The benefit of the EBITDA Multiple as a continuing value is that the EBITDA Multiple utilizes the markets valuation of performance to assess continuing value.
-The value of operations should be adjusted by mid-year discounting because present value calculations assume that all cash flows occur at the beginning of the year.
-As a manager of a publicly held company, your task is to maximize the intrinsic value of the company and to properly manage the expectations of the financial market.
-In the Adjusted Present Value (APV) model, you include only the final period’s tax shield value when calculating the continuing value.
Expert Solution
True: CAGR indicates the exact rate of an investment’s growth, considering that it grows at the same rate and the returns are reinvested. So these are both ways to calculate the same growth rate.
True: EBITDA multiple, also known as the EV-to-EBITDA multiple, is used to determine the value of a company.
False: No, the present value assumes that all cash flows occur at the end of the year.
True: By maximizing the intrinsic value is to create high value in the firm, which should be the main objective of every manager.
True: Yes, In APV we include only the final periods’ Tax shield value while calculating the continuing value, which provide base for estimating future cash flows
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