A critical assumption of the net operating income (NOI) approach to valuation is :

CS Executive · Financial and Strategic Management · PYQS · June 2021
A critical assumption of the net operating income (NOI) approach to valuation is :
(A) That debt and equity levels remain unchanged
(B) That dividends increase at a constant rate
(C) That $k_{o}$ remains constant regardless of changes in leverage
(D) That interest expense and taxes are included in the calculation

Answer & Explanation:

Correct Answer: Option (C)

Official answer key: (C).

Topics: Capital Structure Theories

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