Why free cash flow is the most useful metrics for investors

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Reference no: EM131949228

1. The interest rate is 9% compounded annually. Consider the following cash flow.

Year 0: (-$45)

Year 1: $0

Year 2: $87

Year 3: $142

Year 4: $192

Year 5: $252

Find the value of A --where you receive A 6 times (years 0-5)--that is economically equivalent to the preceding cash flow. HINT: This is different than the normal equal payment series because you are also receiving A in year 0.

2. Explain why Free Cash Flow is the most useful metrics for investors?

Reference no: EM131949228

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