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Explain the concept of "free" cash flows

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1. Explain the concept of "free" cash flows. What makes them "free"?
2. The theory supporting free cash flow-based valuation is that
3. How do free cash flows available for debt and equity stakeholders differ from free cash flows available for common equity shareholders?
4. Describe which types of cash flows are not free for common equity shareholders?
5. The free cash flow-based valuation approach cannot be used for firms that generate negative cash flows.
6. Conceptually, why should you expect valuation based on dividends and valuation based on the free cash flows for common equity shareholders to yield identical value estimates?
7. If the firm borrows cash by issuing debt, how does that transaction affect free cash flows for common equity shareholders?
8. Suppose you are seeking to value a stream of expected future cash flows that will be used to pay all future debt and equity holder financing claims. What is the appropriate discount rate?
9. Suppose you are valuing a healthy, growing, profitable firm and you project that the firm will generate negative free cash flows for equity shareholders in each of the next five years. Explain how a free-cash-flows approach can produce positive valuations of a firm that is expected to generate negative free cash flows over the next five years.
10. Describe circumstances when free cash flows to equity shareholders and free cash flows to all debt and equity stakeholders will be identical.