Question

We discussed three values of the firm: market value, accounting value, and intrinsic value. Explain how...

We discussed three values of the firm: market value, accounting value, and intrinsic value. Explain how intrinsic value is associated with free cash flow. (Write your answer within 100 words.)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Stock valuation via free cash flow approach: Please explain how to find the the intrinsic firm...
Stock valuation via free cash flow approach: Please explain how to find the the intrinsic firm value, and then back out the intrinsic stock value per share. I'm currently doing this for the McDonalds stock
Explain why the intrinsic value of a firm may be different from its market value?
Explain why the intrinsic value of a firm may be different from its market value?
Explain how free cash flow is used to estimate the value of a firm or individual...
Explain how free cash flow is used to estimate the value of a firm or individual stock.
Choose two of the following concepts discussed in this week’s materials. • Anchoring • Mental accounting...
Choose two of the following concepts discussed in this week’s materials. • Anchoring • Mental accounting • Herd behavior • Prospect theory Define each in your own words and explain how each could apply to your personal financial and credit decisions. Your entire response should be at least 100 words.
If a security is underpriced (i.e. intrinsic value > market price), then what is the relationship...
If a security is underpriced (i.e. intrinsic value > market price), then what is the relationship between its market capitalization rate (k) and its expected rate of return (EHPR)? Briefly explain your answer. (if you can point out all of the points needed to answer this so I can turn that into 400 words) [For this theoretical sub-question a word limit of 400 word is required.]
5.1.c - book value vs market value: For purposes of valuation, ... ... book values are...
5.1.c - book value vs market value: For purposes of valuation, ... ... book values are more important than market values because market values represent the opinions of investors who are not necessarily 'rational' as assumed in most models of capital markets and asset pricing. ... market values are more important than book values because market values represent financial claims holders' assessment of the value of free cash flows from the firm to which they have rights of ownership. ......
Company’s financials: Market value of debt € 500,000 Cost of debt 7% Tax rate 20% Adjusted...
Company’s financials: Market value of debt € 500,000 Cost of debt 7% Tax rate 20% Adjusted beta 1.6 Risk-free rate of return 4% Equity risk premium 5% Optimal capital structure: Debt – 45%, equity – 55% Free cash flow (current year) € 82,000 Projected long-term growth rate in free cash flow 4% Number of shares outstanding 22,000 Assume that the free cash flow to the firm is expected to grow indefinitely. Using the DCF method, estimate: 1. the value of...
We have discussed how to calculate the yield to maturity for a fixed-payment loan. Now, we...
We have discussed how to calculate the yield to maturity for a fixed-payment loan. Now, we can applied the process to find the interest for a bond. Consider a $1,000-face-value bond with 5 years to maturity and yearly coupon payments of $100, which means you will receive $100 every year for the next five years and $1,000 at maturity. Suppose the price for this bond is$1,000. A. Calculate the interest (yield to maturity) for this bond. You need to write...
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach....
The Free Cash Flows Valuation Approach. Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm? Please keep your original post to under 100 words.
Intrinsic Value of Merger target Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1.5...
Intrinsic Value of Merger target Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1.5 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.40 (given its target capital structure). Vandell has $11.41 million in debt that trades at par and pays a 7.2% interest rate. Vandell’s free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 4% a year. Vandell pays a 25%...