9 One problem with free cash flow method is that it gives too much weight to continuing value

Finance Dec 09, 2020

9 One problem with free cash flow method is that it gives too much weight to continuing value. Do you agree ? 5 In the free cash flow method a firm is worth more it it invests less. Do you agree?

Expert Solution

Answer to Q no 1

Yes the continuing value has more weightage because continuing value is the discounted value of the cash flow for n number of years and is pulled to bring it to the present value

Answer to Q no 2

it is true a firm worth more , it invests less because in Free Cash Flow Method , the cash flow is after deducting Capital Expenditure and other investments , so the statement is true

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