Which of the Following Is the Appropriate Way to Calculate

question 60

Multiple Choice

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/(r_E - g)
• B)P₀ = PV(Future Free Cash Flow of Firm)/(Shares Outstanding₀)
• C)P₀ = [Div₁/(r_E - g)]/(Shares Outstanding₀)
• D)P₀ = (V₀ + Cash₀ - Debt₀)/(Shares Outstanding₀)
• E)P₀ = PV(Future Free Cash Flow of Firm)