Which of the following is the appropriate way to calculate the price of a share of a given company using the free cash flow valuation model?
A) P₀ = Div₁/(rE - g)
B) P₀ = PV(Future Free Cash Flow of Firm) /(Shares Outstanding₀)
C) P₀ = [Div₁/(rE - g) ]/(Shares Outstanding₀)
D) P₀ = (V₀ + Cash₀ - Debt₀) /(Shares Outstanding₀)
E) P₀ = PV(Future Free Cash Flow of Firm)
Correct Answer:
Verified
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