Discounting Free Cash Flow or Discounting Equity Cash Flow
Which of these two ways is better: discounting the Free Cash Flow or discounting the Equity Cash Flow?
Expert
The results we find by discounting the Equity Cash Flow and the Free Cash Flow are the same (otherwise, both of the valuations are not correct). Personally, we prefer discounting Equity Cash Flows where we get the flow and the discount rate more intuitive. We also like to complement such valuation with the APV.
John Wong is a fresh graduate and has a limited amount of funds for investments. He expects that the Hong Kong stock market will fall soon but he is not familiar with derivatives. In order to gain more money to buy a car, he explores engaging in Hang Seng Index (HSI)
Straddle & Strangle: In the case of shorting butterfly spread, it can be seen that the gains are limited. However, there exists another strategy known as straddle which produces unlimited gains. This strategy benefits when the trader expects that
Explain modern quantitative methodology for portfolio selection.
AB Corporation has 16% cost of equity, 35% tax rate, and debt-to-equity ratio of 30%. XY Corporation has 30% tax rate and debt-to-equity ratio of 40%. Both AB and XY are in the same business of selling automotive parts. If the riskless rate is 4% and the expected retu
Efficiency Ratios: These ratios comprise Receivables Turnover, Inventory Turnover, Asset Turnover and Net Working Capital Turnover ratios. Efficiency ratios show the utilization of Assets of the company thus as to generate Revenue that is, the best ut
FedEx would like to acquire 300 vans for its business. It can buy each van for $35,000, depreciate it completely over 5 years, and then sell it for $10,000. The tax rate of FedEx is 30%, and its cost of debt is 10%. Avis Fleet Rental will lease these vans to FedEx for
Which determines the shape of the term structure of Interest rates?
Explain the definition of put–call parity described by Reinach.
Stock Market: To trade company shares (or stock) and derivatives, a stock market or equity market is public entity where these shares and derivatives are sold at agreed price. These are to be listed on a stock exchange in order to trade publicly.
18,76,764
1949211 Asked
3,689
Active Tutors
1412420
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!