Question
What does enterprise value represent conceptually?
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Answer
Total firm value independent of capital structure.
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Question
How is enterprise value calculated?
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Answer
Equity + debt + preferred − cash and equivalents.
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Question
What happens to total market value in a stock split?
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Answer
It is unchanged.
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Question
In the Gordon growth model, why does an increase in r lower estimated value?
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Answer
A higher discount rate reduces present value.
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