Review case of the free cash flow hypothesis

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Question: Assess the likelihood that the following firms will be taken over, based upon your understanding of the free cash flow hypothesis.

a. A firm with high growth prospects, good projects, low leverage, and high earnings.

b. A firm with low growth prospects, poor projects, low leverage, and poor earnings.

c. A firm with high growth prospects, good projects, high leverage, and low earnings.

d. A firm with low growth prospects, poor projects, high leverage, and good earnings.

e. A firm with low growth prospects, poor projects, low leverage, and good earnings. You can assume that earnings and free cash flows are highly correlated.

Reference no: EM131690015

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