Analyze the following equation by describing (i) each individual part of the equation, (ii) the mathematical...

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Analyze the following equation by describing (i) each individual part of the equation, (ii) the mathematical relationship among the parts, and (iii) the purpose of the equation. (Worth 3 Points) Asset Value = Question 1(b): With respect to the following equation, what do we mean when we say, "the denominator is what it costs to generate the numerator?" (Worth 3 Points) Net cash generated by an asset over time Value of an asset today = Rate paid and received to use the asset over time Short-term investments Interest [-1 Questions 2(a) through 2(d) are worth a total of four (4) points. Net Cash Flow, (1 + Rate)! Using the information from years n and n-1 below, answer the following questions. Question 2(a): What are the company's liabilities and equity in year n and n-1? (Worth 1 Points) Question 2(b) What is the company's net income in year n and n-1? (Worth 1 Points) Question 2(c): What is the company's free cash flow in year n? (Worth I Points) Question 2(d): As an investor, explain how you would use net income and free cash flow in evaluating the company. (Worth / Points) Depreciation and amortization Common dividends Cash Accruals Notes payable Accounts payable Long-term debt Inventories Accounts receivable. Common stock Operating costs excluding depreciation Sales Tax rate Net plant and equipment n 250 350 500 550 550 1,000 1,100 1,500 1,650 2,750 5,000 9,000 10,000 40% 4,000 n-1 100 100 700 500 500 500 200 1,000 1,000 1,500 2,500 4,000 9,500 12,500 4,200 Analyze the following equation by describing (i) each individual part of the equation, (ii) the mathematical relationship among the parts, and (iii) the purpose of the equation. (Worth 3 Points) Asset Value = Question 1(b): With respect to the following equation, what do we mean when we say, "the denominator is what it costs to generate the numerator?" (Worth 3 Points) Net cash generated by an asset over time Value of an asset today = Rate paid and received to use the asset over time Short-term investments Interest [-1 Questions 2(a) through 2(d) are worth a total of four (4) points. Net Cash Flow, (1 + Rate)! Using the information from years n and n-1 below, answer the following questions. Question 2(a): What are the company's liabilities and equity in year n and n-1? (Worth 1 Points) Question 2(b) What is the company's net income in year n and n-1? (Worth 1 Points) Question 2(c): What is the company's free cash flow in year n? (Worth I Points) Question 2(d): As an investor, explain how you would use net income and free cash flow in evaluating the company. (Worth / Points) Depreciation and amortization Common dividends Cash Accruals Notes payable Accounts payable Long-term debt Inventories Accounts receivable. Common stock Operating costs excluding depreciation Sales Tax rate Net plant and equipment n 250 350 500 550 550 1,000 1,100 1,500 1,650 2,750 5,000 9,000 10,000 40% 4,000 n-1 100 100 700 500 500 500 200 1,000 1,000 1,500 2,500 4,000 9,500 12,500 4,200

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Question 1 Net cash flow Cash flows generated by the asset at the year t t the year rate ... View the full answer