In response support or respectfully challenge their explanation or application of the selected valuation method.

Comment 1. Income valuation is a method of valuing a company by estimating the future cash flows it will generate and discounting them back to their present value. The idea behind income valuation is that a company's value is derived from the cash flows it will generate in the future.

To apply this method to the company chose, Tesla Inc., would need to estimate the company's future cash flows, taking into account factors such as expected revenue growth, operating expenses, and capital expenditures. would also need to determine an appropriate discount rate, which represents the opportunity cost of investing in Tesla versus alternative investment options. The present value of the estimated cash flows is then calculated and summed to produce an estimate of Tesla's value.

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Comment 2.

When evaluating a company there a couple of income-based options you can use. All of these methods are used to show the potential of future payoff. These would include dividends, cash flow and earnings. In the case of CVS Health, the company chose for my project the one that would represent the company the best in the direction the economy is going is Free Cash Flows. During this time, it is important to show the cash flow that is to be distributed to the shareholders. Now we can also break this down to free cash flows to all debt and equity stakeholders or free cash flows to equity stakeholders. Our objective is to show the value of common shareholders equity so we will use free cash flows to equity shareholders which is discounted at the cost of capital. In this instance we would identify free cash flows available to equity shareholders after all other cash requirements for working capital, capital expenditures, principal and interest payment on debt, preferred stock dividends and non-controlling interest dividends. We would then compute the present value of common equity and the present value of the expected future free cash flows for common equity shareholders.

Response for Comment 2 .............................................................................