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1. Compare the stock prices estimated by the discounted FCF model to the actual stock price. What recommendations can you make as to whether clients
1. Compare the stock prices estimated by the discounted FCF model to the actual stock price. What recommendations can you make as to whether clients should buy or sell stock based on your price estimates from the discounted FCF method? Why?
2. Explain why the stock price estimate from the discounted FCF model differs from the actual stock price
Assume the stock price is $7 per share, actual stock price is $4 per share
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