Which of the following statements concerning stock valuation is most correct? a.

Question

Which of the following statements concerning stock valuation is most correct?

a..The free cash flow method will result in a higher valuation that the dividend valuation method, because cash flows are higher than dividends.

b. The free cash method can only be used if a company does not pay dividends

c. The dividend valuation approach is more accurate than the free cash flow approach.

d. When using the free cash flow method, interest-bearing debt must be subtracted from firm value to determine the stock value.

Explanation / Answer

a..The free cash flow method will result in a higher valuation that the dividend valuation method, because cash flows are higher than dividends.

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