One challenge in business valuation is estimating the


One challenge in business valuation is estimating the future relevant cash flows to be discounted back to determine a firm's present value. The concept of free cash flow is useful in this task. Read the "Free Cash Flow" section in Chapter 9 of the Higgins text and then discuss the following:

List the components comprising free cash flow.

What does it mean when a company's free cash flow is negative in one or more years?

Explain why negative free cash flows are usually associated with growing companies.

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Financial Management: One challenge in business valuation is estimating the
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