■Fill in the yellow cells) 2 3 5 Most Recent Year $ Instructions and Explanations Free cash flows (FCF), for this exercise is the difference between cash generated from operating income minus capital expenses at the end of your company's fiscal or calendar year. The present value of free cash flows is one method of determining a company's value to a potential buyer. Note: For Milestone One, please use the free cash flows shown for your selected company on the List of Companies tab of this Excel workbook. Use 5% as the interest rate for these questions. 5 7 $ $ B 9 $ $ $ 0 1 3 5 8 9 0 $ $ $ 1 $ 2 $ 3 4 5 $ 6 For the purpose of this exercise, what will happen to the total PV if your selected company's free cash flows for each year reported in Question 1 were reduced by 10%? 7 8 Required Rate of Return for Risk Associated With Projected Future Three Year's Free Cash 9 Flows. 5% Most Recent Year's Cash Flow fom Queston 1. < > ... 1. Time Value of Money 2. Stock and Bond Valuation 3. Capital Budgeting 4. Interest Rate Implications + :
show what is the
What are the implications of the change in present value based on risk?
In other words, what does the change mean to your selected company, and how would you, as a
Based on the present value of your selected company that you calculated, and being mindful of the need to effectively balance portfolio risk with return, what recommendation would you make about purchasing the company as an investment at that future price?
references: https://app.hoovers.dnb.com/company/523050f1-9eb2-3a0f-a4f8-d44b134e1f84#report/company_financial_health and https://app.hoovers.dnb.com/company/39a4f25c-cccc-308b-a221-4c7f3c95db87#report/company_financial_health.
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