Question: Michael C. Ehrhardt and Eugene F. Brigham make the following illustration: Questions Please explain based on the picture above! 1. What are the goals of

Michael C. Ehrhardt and Eugene F. Brigham make the following illustration:

Michael C. Ehrhardt and Eugene F. Brigham make the following illustration: Questions

Questions

Please explain based on the picture above!

1. What are the goals of a company? 2. How the company achieves these goals?

Net operating profit after taxes Required investments in operating capital Free cash flow (FCF) Value FCF FCF2 (1 + WACC) (1+ WACC)2 +...+ FCF (1 + WACC) Weighted average cost of capital (WACC) Market interest rates Firm's debt/equity mix Cost of debt Cost of equity Market risk aversion Firm's business risk

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