3. Fundamentals of the free cash flow corporate valuation model Aa Aa E Several methods can be used to compute the intrinsic value of a share of a company's common stock. One method uses the free cash flow (FCF) valuation model, while the another method uses the dividend discount model. The FCF valuation model computes a firm's value-also called its the value of its operating activities (Vop) and the value of firm's nonoperating value-as the sum of , where: the firm's expected future free cash flows by its weighted average Vop is computed by cost of capital. A firm's nonoperating assets include its highly marketable securities in which a firm invests its temporarily available excess cash, and its investments in other businesses. 1st line possible answers: Intrinsic, Market, or Historical 2nd line possible answers: Economic, Estimated or Entity 3rd line possible answer: Assets, Equity or Liabilities 4th line possible answer: Dividing, Discounting or Multiplying 5th line possible answer: Long-term or Short-term