Look again at Tables 4.3 (Growth-Tech) and 4.7 (Concatenator Manufacturing). Note the discontinuous increases in dividends and
Question:
Look again at Tables 4.3 (Growth-Tech) and 4.7 (Concatenator Manufacturing). Note the discontinuous increases in dividends and free cash flow when asset growth slows down. Now look at your answer to Practice Question 11: Dividends are expected to grow smoothly, although at a lower rate after year 3. Is there an error or hidden inconsistency in Practice Question 11? Write down a general rule or procedure for deciding how to forecast dividends or free cashflow.
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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There is something of an inconsistency in Practice Question 11 since th...View the full answer
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Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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