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)

Understand the concept of economic profit versus accounting profit by incorporating both explicit and implicit costs.

Recognize the significance of input variation on total output and its relationship to the law of diminishing returns.

Analyze the economics of firm decision-making in the short run, including the effects of changing input levels on costs and output.

Calculate and understand the significance of average product at different levels of labor input.