Question

i n your words in as much detail as is needed to show full comprehension, describe (1) the components of Equation below and (i) the purpose of the equation (This part is worth 2.5 points) Free Cash Flow, (1 + Weighted Average Cost of Capital) 2 In your own words, in as much detail as is needed to show full comprehension, describe of Equation below and (ii) the purpose of the equation. (This part is worth 25 points) the components Interest Principal, (1 + Interst Rate)' '(1 + Interst Rate)" 3 In your own words in as much detail as is needed to show full comprehension, describe (1) the components of Equation 3. below and (ii) the purpose of the equation (This part is worth 25 points) Dividend (1 + Required Return) Terminal Value, (1 + Required Return)" 4 In your own words, in as much detail as is needed to show full comprehension, describe what Equations 1.2 and 3 have in common. (This part is worth 2.5 points)

answer question number 4 only

Answer 1

All the above 3 equations are calculating the total amount of present value of future cash flows. These amounts are to be received after 'n' no.. of years.

In all the above 3 equations, cash flows are getting compound one time at a year, 't=1', that is, compounded annually.