1. The value of Chiefs Corporation's core operations is $120,000, the value of its nonoperating assets is $40,000, the value of its debt is $100,000, and it has no other capital claims. What is the value of Chiefs' common equity?
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3. Briefly describe why the value of common equity must be equal to the present value of discounted dividends.
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5. How do we predict a company's future dividends? Why might the prediction of future dividends require us to predict future free cash flows?
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1. Why might separating core operations from noncore operations (e.g., financial assets) facilitate valuation?