Corporate Finance Analysis - Free Cash Flow, Weighted Average Cost of Capital, Cost of Money, Market Orders and Limit Orders

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student:
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CORPORATE FINANCE ANALYSIS
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Table of Contents
f. Indicating what is free cash flow:...........................................................................................2
g. Describing about weighted average cost of capital:...............................................................2
h. Indicating how free cash flow and weighted average cost of capital interact to determine
firms value:.................................................................................................................................2
j. Stating the cost borrower uses for paying debt capital, while indicating two components
make up the cost of using equity cost of capital and stating the four fundamental factors that
affect cost of money or the general level of interest rates:........................................................3
k. Indicating the economic conditions that affect cost of money:..............................................3
p. Stating the difference between market orders and limit orders:............................................3
Reference and Bibliography:......................................................................................................5

CORPORATE FINANCE ANALYSIS
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f. Indicating what is free cash flow:
Free cash flow is the measure for detecting the capability of a business to generate
adequate cash from its operations after deducting expenses such as capital expenditure.
Moreover, the free cash flow can eventually help in detecting the level of income that is
obtained by the company, which can be sued for expansion, debt reduction, dividends and
other operational purposes. The free cash flow allows organisation to determine the level of
cash inflows that can be generated from a proposed project, as it allows them to make
adequate investment decisions (Brigham et al. 2016).
g. Describing about weighted average cost of capital:
Weighted average cost of capital is mainly a calculation, which is used by investors to
determine the firm’s cost of capital by weighing each category of capital used by the
organisation. With the help of weighted average cost of capital companies are able to detect
the minimum cost of capital, which is used while analysing investment projects. The
weighted average cost of capital uses cost of equity, cost of debt and other components of the
capital to determine the minimum returns needed by the company.
h. Indicating how free cash flow and weighted average cost of capital interact to
determine firms value:
Free cash flow and weighted average cost of capital is used by the company to
determine the firms value, which evaluates the free cash flow that can be discounted at the
cost of capital rate. In addition, the firms expected free cash flows are discounted by using the
weighted average cost of capital, which eventually portrays the firms value in the current
fiscal year by evaluating the future free cash flows (Brigham et al. 2016).