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If a Company Is Currently Generating a Free Cash Flow

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If a company is currently generating a free cash flow of $10 per share,which is expected to continue indefinitely,and if the discount rate is 10%,the estimated share price would be $100.


Definitions:

Poisson Probability

A distribution showing the probability of a given number of events happening in a fixed interval of time or space.

Distribution

The way in which data points are spread out or distributed across various values.

Discrete

Refers to a type of quantitative variable that can assume a countable number of distinct values, often representing categories or counts.

Random Variable

A random phenomenon's numerical outcomes manifested in a variable.

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