Value-based management and corporate governance

Reference no: EM13204238

Capital Valuation, Value-Based Management, and CorporateGovernance

1. In a free cash flow model of firm value explain the term "horizon value." How is the computation of horizon value similar to the computations involved in the Constant Growth Rate model studied Chapter 7? (Two questions here-separate paragraphs needed.)

2. Value-based management concentrates on the (present) value of operations. Why?

3. How might the excessive cash needs of a young, rapidly-growing firm lead to an incorrect value of the firm's stock using the free cash flow approach?

4. List two of the so-called "value drivers" and briefly explain how each impacts cash flow and the value of operations. Number each explanation separately.

5. Sales growth alone is not enough to insure an increase in the firm's value of operations. Why not?

Reference no: EM13204238

Questions Cloud

State the base of the solid is the region in the xy-plane : The base of the solid is the region in the xy-plane bounded by the paraboles y=x^2 and x=y^2 . find the volume of this solid if every cross-section perpendicular

Find what is the official unemployment rate : Suppose that the natural rate of unemployment in a particular year is 5 percent and the actual rate of unemployment is 9 percent. Use Okun's law to determine the size of the GDP gap in percentage-point terms. If the potential GDP is $500 billion i..

Distributions to shareholders- dividends and repurchases : List and briefly discuss two motivations that would lead a firm to engage in a stock repurchase versus a straight cash dividend and How might the signaling hypothesis be used to justify the observed practice of dividend smoothing in the real w..

Explain how many steps escalator have from bottom to top : If the escalator had been stopped, how many steps did the escalator have from the bottom to the top?

Value-based management and corporate governance : How might the excessive cash needs of a young, rapidly-growing firm lead to an incorrect value of the firm's stock using the free cash flow approach?

What is the demand relation in the industry segment : A particular segment of the medical device industry is dominated by a handful of firms. These firms have combined into an effective cartel. All firms in the cartel have the same cost structure with zero fixed costs and each has constant marginal c..

Explain what dimensions will give the largest printed area : A poster is to have an area of 230 in2 with 2 inch margins at the bottom and sides and a 3 inch margin at the top. What dimensions will give the largest printed area?

Find the volume of a right circular cone with height h : How fast is the height of the pile increasing when the pile is 19 feet high? Recall that the volume of a right circular cone with height h and radius of the base r is given by.

Cash flow estimation and risk analysis : What problem would arise if in projecting cash flows for a capital budgeting decision on a project interest expense was not excluded and Why are incremental cash flows the relevant cash flows for capital budgeting analysis? Why not just analyze th..

User Account

All Pages