Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
Considerasimpleexample.Assumethatyouhaveanindex tradingat 700 andthattheaveragedividendyieldofstocksin the index is 5 percent. E ...
Theexpecteddividends(andstockbuybacks)ontheindexfor the next five years can be estimated from the current dividends and expected ...
model.Infact,onewaytodescribeafreecashflowtoequity model is that it represents a model where we discount potential dividends rat ...
TheFCFEmodeltreatsthestockholderinapubliclytraded firmastheequivalentoftheownerofaprivatebusiness.The lattercanlayclaimonallcash ...
Thereturnonequitymayalsohavetobemodifiedtoreflect thefactsthattheconventionalmeasureofthereturnincludes interest income from cas ...
Constant Growth FCFE Model TheconstantgrowthFCFEmodelisdesignedtovaluefirms thataregrowingatastablerateandarehenceinsteadystate. ...
1.Youcanusethetypicalreinvestmentratesforfirmsinthe industrytowhichthefirmbelongs.Asimplewaytodothisis tousetheaveragecapitalexp ...
ILLUSTRATION 5.7: FCFE Stable Growth Model: ExxonMobil Earlier in this chapter, we valued ExxonMobil using a modified dividend d ...
end of 2003, we estimated a return on equity of 21.88%. Toestimatethereinvestmentrate,welookedatnet capitalexpendituresandworki ...
andallowsforthecyclesthatareusuallyseenincommodity prices.Second,thereinvestmentismeasureddirectlyinthis valuation by looking at ...
wheregn= Growth rate after terminal year forever Thesamecaveatsthatapplytothegrowthrateforthestable growthratemodel,describedint ...
theSUVsandminivansmadebyU.S.automanufacturers.To value the company, we made the following assumptions: Toyotareportednetincomeof ...
Witha risk-freerateof2%(in yen) thecost ofequity for Toyota is 7.16%: Beyondthefifthyear,weassumethattheexpectedgrowth rateinnet ...
Thesumofthepresentvalueoffreecashflowstoequityover thehigh-growthperiodis2,239.49billionyen.To estimate theterminalvalue,wefirst ...
+ Cash and marketable securities 1,484 billion yen = Value of equity 22,811 billion yen รท Number of shares 3.61 billion = Value ...
Pn2 = Value of equity at the end of transitional period n1 = End of initial high-growth period n2 = End of transition period Sin ...
theonesmadeby thethree-stagedividend discountmodel, butthefocusisonFCFEinsteadofdividends,makingitmore suitedtovaluefirmswhosedi ...
Normalized net capital expenditures = 170.38 million CY Normalizednoncashworkingcapitalchange=39.93million CY Normalizednetdebtc ...
8 ), the resulting cost of equity is 9.98%: Startinginyear6,Tsingtaowilltransitiontoastablegrowth rate of 5.5% in year 10. 9 Toc ...
Present value of FCFE during high-growth phase To estimate theterminal value ofequity, we usedthe net incomeintheyear11,reduceit ...
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