Present value of its free cash flows discounted

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Reference no: EM13950216

a. What does it mean when a company's free cash flow is negative in one or more years?

b. Do negative values of free cash flow in way alter or invalidate the notion that a company's fair market value equals the present value of its free cash flows discounted at the company’s weighted average cost of capital?

c. Suppose a company's free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the company's stock?

Reference no: EM13950216

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