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Unformatted text preview: free cash flows, discounted at the WACC, is the value of operations. c. What are nonoperating assets? How can their value be estimated? Answer: Nonoperating assets are marketable securities and ownership of non-controlling interest in another company. The value of nonoperating assets usually is very close to figure that is reported on balance sheets. d. What is the total value of a corporation? Who has claims on this value? Answer: Total corporate value is sum of value of operations, value of nonoperating assets, and value of growth options. (No examples in this chapter have a growth option-- this is deferred until chapter 18). Debt holders have first claim. Preferred stockholders have the next claim. Any remaining value belongs to stockholders....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08