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b. What is free cash flow (FCF)? What is the weighted average cost of capital? What is the free cash flow valuation model?q. Now assume that the stock is currently selling at $30.29. What is its expected rate of return?

b. What is free cash flow (FCF)? What is the weighted average cost of capital? What is the free cash flow valuation model?
q. Now assume that the stock is currently selling at $30.29. What is its expected rate of return?
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b. Free cash flow is the cash flow that the firm has after making all the payments relating to the expenditures as well. It is the operating income less capital expenditures. Weighted average cost of capital is the cost that the firm will have to incur to maintain its capital funding and is calculated as a proportion to the weights and individual cost of capital [ either debt or equity]. In the free cash flow valuation model, the free cash flows of the firm are discounted using the cost of capital to arrive the value of the firm.

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