Several methods can be used to compute the intrinsic value of a share of a company's common stock. One method uses the free cash flow (FCF) valuation model, while the another method uses the dividend discount model. The FCF valuation model computes a firm's the value of its operating activities (Vop) and the value of firm's nonoperating value-also called its value-as the sum of , where: From a manager's perspective, an important difference between a firm's operating assets and its nonoperating assets is that its including interest rates, than by managers' decisions and actions. assets are more strongly influenced by market forces, The company's intrinsic value can be computed and expressed for the organization as a whole, for a component of the company, or on a per-share basis. The per-share intrinsic value of the firm's equity is calculated by dividing the intrinsic value of the equity by the number of Which of the following statements about the FCF valuation model are true? The model is useful because it examines the relationship between a company's risk, operating profitability, and value of the firm's operations. The model can only be used to value companies-but not their component divisions or other smaller operating units The FCF valuation model recognizes that a firm's value is a function of its risk-including its use of debt and equity financing and the markets in which it operates. A company's FCFs are a function of how efficiently and effectively the firm's managers use the company's operating assets and, in turn, the profitability of the company's primary business activities