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True or False?  Discounting free cash flow to equity (FCFE) rather than dividends typically leads to higher...

True or False?  Discounting free cash flow to equity (FCFE) rather than dividends typically leads to higher estimates of intrinsic value.

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Answer #1

Given statement is True.
Discounting free cash flow to equity (FCFE) rather than dividends typically leads to higher estimates of intrinsic value.
Valuation as per the FCFE will be greater than valuation as per DDM(dividend discount model) on account of control prospective and earlier valuation in FCFE.
FCFE is used when valuation is done from control prospective and free cashflow is alligned with firm profitability.
Valuation as per DDM cannot be greater than FCFE.

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