What are the threats to the validity of our models

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Reference no: EM133359914

Question: Calculate free cash flows to the firm for historical and current years. We will be using these historical free cash flows as estimates of future free cash flows.

Answer the following:

1. What are the threats to the validity of our models when we rely on historical cash flows to help us predict future cash flows?

2. Is it better to base our estimate of future cash flows off of the most recent year or an average of past several years, for example, five years?

Reference no: EM133359914

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