What is the biggest disadvantage of using the Free Cash Flow to the Firm (FCFF) valuation approach

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What is the biggest disadvantage of using the Free Cash Flow to the Firm (FCFF) valuation approach as compared to the Free Cash Flow to Equity (FCFE) approach?

a. Too much focus on pre-debt cash flows can blind the user to possible survival problems

b. FCFF approach easily incorporates the costs and benefits of borrowing

c. FCFE approach can be applied to more situations than the FCFF approach

d. FCFF approach is too simple to apply

Related Book For answer-question

Horngrens Financial and Managerial Accounting

ISBN: 978-0133255584

4th Edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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Posted Date: Feb 13, 2024 02:25 AM

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What is the biggest disadvantage of using the Free Cash Flow to the Firm (FCFF) valuation approach

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Horngrens Financial and Managerial Accounting

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