How free cash flows approach can produce positive valuations

Reference no: EM13902252

FREE CASH FLOWS VALUATION WHEN FREE CASH FLOWS ARE NEGATIVE. Suppose you are valuing a healthy, growing, profitable firm and you project that the firm will generate negative free cash flows for equity shareholders in each of the next five years. Can you use the free cash flows valuation approach when cash flows are nega- tive? If so, explain how the free cash flows approach can produce positive valuations of firms when they are expected to generate negative free cash flows over the next five years.

Reference no: EM13902252

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