Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 5MC: What is Computron’s free cash flow? What are Computron’s “net uses” of its FCF?
Related questions
Question
How can we develop the techniques for establishing cash flow equivalence with compound-interest factors?
Expert Solution
Step 1
Answer:
To measure the equivalence of the sequence of compound interest factors used to extract the values of Present and future values.
The technique for single payment equivalence we will determine the future value and present value are as follows,
When a contrast of present value with respect to future value is required then compounding is needed.
Step 2
Based on the uniform series equivalence technique, the future and present values are calculated by using the formulas,
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