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Free cash flows should be discounted at the firm’s weighted average cost of capital to find...

Free cash flows should be discounted at the firm’s weighted average cost of capital to find the value of its operations.

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Answer #1

This Statement is True.
Free cash flow refers to the company genereates cash after all cash outflow.
Free cash flow of the firm should be discounted at firm weighted average cost of capital.
WACC - Its include the cost of debt, cost of equity and cost of prefernce share at there respective percentage shareholding.
If we have to calculate Free cash flow to Equity we have to take cost of Equity to discount the value of operations.

I hope this clear your doubt.

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