Suppose your company's WACC=12% and you know that the free cash flow of your company next year is going to be FCF-$1.2 and then FCF is expected to grow at 8%. Then the PCF is and the company's horizon value in one year is This means that the firm's value today is

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.