a) Explain the relevance of the following formula in the context of equity analysis. VE-...
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a) Explain the relevance of the following formula in the context of equity analysis. VE- P = (V P) +(VE-V) VE = estimated value P = market price V = intrinsic value (10 Marks) b) Explain how firms respond to positive and negative free cash flows (FCF). And how this response can be used in the estimation of free cash flow to the firm (FCFF) and free cash flow to equity (FCFE). (20 Marks) c) Discuss the context under which free cash flow models (FCFF and FCFE) are preferable to dividend discount models. (20 Marks) Total (50 Marks)
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