The prevalent form of the DCF model in practice is the two-stage “unlevered DCF model”. Which of the following statements is not correct?
A.The enterprise value will equal Stage #1 minus Stage #2.
B.Stage #1 projects unlevered FCFs using mid-year assumptions for calculating the present value of periodic cash flows.
C.Stage #2 calculates the terminal value by estimating the value of the company at the end of stage #1 then discounting it to the present.
D.Stage #1 forecast period is typically 5-10 years.
E.All cash flows are discounted using the weighted average cost of capital (WACC).