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Explain why the statement does NOT apply to equation 2 please. Equation 2 t=1n(1+WeightedAverageCostofCapital)iFreeCashFlow a) Net operating profit after taxes, net operating working capital and
Explain why the statement does NOT apply to equation 2 please.
Equation 2 t=1n(1+WeightedAverageCostofCapital)iFreeCashFlow a) Net operating profit after taxes, net operating working capital and total net operating capital are needed to determine the numerator. b) Investors are very interested in the numerator. c) Equation 1 above and this Equation 2 seek to quantify the value of a cash flow generating asset. d) Increasing revenue may not increase the quotient of this equation. e) Borrowing more money may not increase the quotient of this equation. f) Ceteris paribus, if the market price of the stock for this company is lower than the value determined by this Equation 2 then you should consider buying this stock. g) None of the aboveStep by Step Solution
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