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Could you please help me understanding what free cash flow for firm and equity are and why are they mainly used for.what purpose do they serve .do we use it when asked in question specifically .this may b a very basic question at this point but i need your simple words to understand .in which video lecture i can find it.
The free cash flow to the firm is used to calculate the total value of the firm (by discounting at the WACC).
The free cash flow to equity is used for calculating the value of the equity (by discounting at the cost of equity).There is no lecture at the moment, but do look at the chapter on this in the free lectures notes.
Hello
i’m currently doing pursuit co question of june 2011
please can u tell me how they calculate 32% of growth in operating profit marginmoreover how to calculate the 22c/$1 increase in sales revenue
additional investment?In future please do start a new thread when you are asking a different question.
There is not 32% growth. The answer says that the operating profit is approximately 32% of sales revenue, which is nothing to do with growth.
In 2011 the operating profit is 5169 and the revenue is 16146.
5169/16146 = 32%The revenue for May 2011 is 16146.
The revenue next year (year 1) is forecast at 17115Therefore the increase in revenue is 969.
At 22c per $1 (as per the question) this means additional investment of 0.22 x 969 = 213.
It is the same procedure for each of the following years.
Thank you so much.
Next time I’ll start with the new thread. sorry for this time
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