Over the life of a firm,the capital invested in the firm by the shareholders plus the income of the firm will reflect:

Question

Quizplus · Accepted Answer

The capital invested by shareholders and the income generated by the firm over time represent the ultimate value of the firm to shareholders. This value is reflected in the current and future expected returns from owning shares in the company. While dividends and free cash flows are important factors in determining the attractiveness of owning shares, the ultimate value of the firm is the most important consideration for investors. The value of the firm for debtholders is a separate consideration and is primarily driven by the ability of the firm to make interest and principal payments on its debt obligations.

Over the Life of a Firm,the Capital Invested in the Firm