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Choose all that are appropriate. If two firms are in the same industry, the...

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Accounting

Choose all that are appropriate.

  1. If two firms are in the same industry, the firm with a higher P/E ratio is expected to have more growth opportunities.
  2. The value of a firm can be calculated from the firm's balance sheet by subtracting the sum of all liability items from the sum of all the assets items.
  3. An assumption of discount rate of 10 percent and 3 percent growth would be broadly consistent with a multiple of enterprise value to free cash flow of 13.0.
  4. The cost of debt of a firm can be calculated by multiplying the firm's current ratio by the firm's credit rating and add the risk-free rate.
  5. One way to calculate the cost of equity of a firm is to take the risk-free rate and add the market risk premium adjusted by the firm's beta.

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