Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
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 ...
Evaluating FCFE Models TheFCFEmodelisamoregeneralversionofthedividend discount model and allows analysts more freedom in estimat ...
One final aspect of the model bears repeating. In FCFE models,weareimplicitlyassumingthatcashflowstoequity willbewithdrawnfromth ...
Thiscalculationcanbecomecomplicatedforfirms thatare expectedtochangetheirdebtratiosovertime,sincewehave tocomputenewdebtissuesth ...
FCFE VERSUS DIVIDEND DISCOUNT MODEL VALUATION The FCFE model can be viewed as an alternative to the dividend discount model. Sin ...
Thereareseveralcaseswhere thetwomodelswillprovide differentestimatesofvalue.First,whentheFCFEisgreater than the dividend and the ...
higher value than the dividend discount model whenever FCFE are higher than dividends and a lower value when dividendsexceedFCFE ...
Dividend Discount Model FCFE Model Dealing with cash and marketable securities The income from cash and marketable securities is ...
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