Which of the following statements about the FCF valuation model are true? Check all that apply. The model can be applied to companies that either pay or do not pay a dividend—but it cannot be applied to privately-held companies. The FCF valuation model recognizes that a firm’s value is a function of its risk—including its use of debt and equity financing and the markets in which it operates. A company’s FCFs are a function of how effectively managers control the firm’s costs, manage its operating and nonoperating assets, and generate sales revenues. The model is useful because it demonstrates the relationship between quality of the decisions that managers make and the value of their company.

Consider the market for gas-powered small cars. assume gas-powered small cars are a normal good. for each of the following events, identify which of the determinants of demand or supply are affected. if demand is unaffected by this event because it creates only a supply change, select the “none” option under the “demand determinant” column. similarly, if supply is unaffected by this event because it creates only a demand change, select the “none” option under the “supply determinant” column. event demand determinant supply determinant people decide to have more children. the price of electric small cars falls. the discovery of a new source of iron ore lowers steel prices. an economic recession lowers people’s wealth. a number of major car dealers decide to switch from selling gas-powered cars to selling electric cars. show the effect of the following event on the market for gas-powered small cars: people decide to have more children for each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.