“Comparing the Accuracy and Explainability of Dividend, Free Cash Flow, and Abnormal Earnings Equity Value EstimatesRead the above article and answer the attached question.
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MBA 520 ModuleSix Forecasting Model Questions
The questions that follow and the articleComparing the Accuracy and Explainability of Dividend, Free
Cash Flow, and Abnormal Earnings Equity Value Estimateswill inform your completion of Milestone
Three. An understanding of the models in this assignment will assist you in hypothesizing the
incremental impact of a new investment project for the company. The understanding of these models
will contribute to your ability to look toward the future when considering the direction of an
organization. This activity is worth a total of 75 points. See the distribution of points listed before each
Prompt: Once you have read the articleComparing the Accuracy and Explainability of Dividend, Free
Cash Flow, and Abnormal Earnings Equity Value Estimates and Chapters 6 and 7 of your text, review
and complete the questions below. Use the article and your text to inform your responses to the
1. (20 points) For models 2, 2a, and 2b:
What is the best way to minimize the weighted average cost of capital?
What is the effect of the weighted average cost of capital on the market value?
2. (20 points) For models 3, 3a, and 3b:
What is the relationship between book value of equity and time t-1 and the market value of the
3. (20 points) Discuss model 4 and expand on the importance and the meaning of the market risk
4. (15 points) In your own words, what are the main conclusions for this article, and what could be
improved upon in its analysis?
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