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uestion 17: Analyze the following Equation 3 by describing (i) each individual part of the equation, (ii) t athematical relationship among the parts, (iii)
uestion 17: Analyze the following Equation 3 by describing (i) each individual part of the equation, (ii) t athematical relationship among the parts, (iii) the purpose of the equation. (This question is worth 5 points.) Equation 3 n Free Cash Flowi 1+ Weighted Average Cost of Capital)i t=1 Note: Use the following to understand the denominator. + (% of Debt) (Cost of Debt, after tax) + + = (% of Common) (Cost of Common) (% of Preferred) (Cost of Preferred) Weighted Average Cost of Capital Question 17: Analyze the following Equation 3 by describing (i) each individual part of the equation, (ii) the mathematical relationship among the parts, (iii) the purpose of the equation. (This question is worth 5 points.) Equation 3 n t=1 Free Cash Flowi (1+ Weighted Average Cost of Capital)i Note: Use the following to understand the denominator. + (% of Debt) (Cost of Debt, after tax) + + == (% of Common) (Cost of Common) (% of Preferred) (Cost of Preferred) Weighted Average Cost of Capital [The remainder of this page intentionally left blank]
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