1) Chapter 12: Questions and Exercises 12.1, 12.2 (p. 935):
12.1 Free Cash Flows. Explain ‘‘free’’ cash flows.
Describe which types of cash flows are free and which are not.
How do free cash flows available for debt and equity stakeholders differ from free cash flows available for common equity shareholders?
12.2 Free-Cash-Flows-Based Valuation Approaches.
Explain the theory behind the free cash flows valuation approaches.
Why are free cash flows value-relevant to common equity shareholders when they are not cash flows to those shareholders but rather are cash flows into the firm?
2) Chapter 13: Questions and Exercises 13.2, 13.3 (p. 995):
13.2 Required Income:
Explain required income. What does required income represent? How is required income conceptually analogous to interest expense?
13.3 Residual Income:
Explain residual income. What does residual income represent? What does residual income measure?
3) Chapter 14: Questions and Exercises 14.1, 14.2 (p. 1048):
14.1 Value Determinants.
What are the fundamental determinants of share value, and how do they affect market-based valuation multiples, such as market-to-book and price- earnings ratios?
14.2 Residual ROCE. Explain residual ROCE (return on common shareholders’ equity).
What does residual ROCE represent? What does residual ROCE measure?
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