Look again at Table 4.7. a. How do free cash flow and present value change if asset

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Look again at Table 4.7.

a. How do free cash flow and present value change if asset growth rate is only 15 percent in years 1 to 5? If value declines, explain why.

b. Suppose the business is a publicly traded company with one million shares outstanding. Then the company issues new stock to cover the present value of negative free cash flow for years 1 to 6. How many shares will be issued and at what price?

c. Value the company's one million existing shares by the two methods described in Section4.5.

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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Question Posted: Jun 08, 2011 03:53 AM

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Look again at Table 4.7. a. How do free cash flow and present value change if asset

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a The present value of the nearterm flows ie years 1 through 6 is 138 The present value of the horiz...View the full answer

Principles of Corporate Finance

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