International Finance and Accounting Handbook

This will ensure consistency across estimates and valuations in different curren- cies. The biggest limitation of this approach ...

try risk, but does assume that the market overall is correctly priced. Consider, for in- stance, a very simple valuation model f ...

Note that the term with 42.33 in the last term of the equation is the terminal value of the index, based on the stable growth ra ...

STANDARD APPROACH. The conventional approach for estimating the beta of an in- vestment is a regression of the historical return ...

used is the Athens Stock Index. This is a fairly conventional choice since most serv- ices estimate betas against a local index. ...

9.2 ESTIMATING DISCOUNT RATES 9 • 19 Exhibit 9.5. Beta Estimate for Titan: MSCI Euro Index. Exhibit 9.6. Beta Estimate For Titan ...

(ii) Fundamental Betas. A second way to estimate betas is to look at the fundamen- tals of the business. The beta for a firm may ...

While the arguments for such actions may be couched in terms of offering competi- tive advantage and flexibility, they do also r ...

Intuitively, we expect that as leverage increases (as measured by the debt to equity ratio), equity investors bear increasing am ...

Step 5: Finally, we estimate the current market values of debt and equity of the firm and use this debt-to-equity ratio to esti ...

software. We could define the business as entertainment software and consider only companies that primarily manufacture entertai ...

HOW WELL DO BETAS TRAVEL? Often, when analyzing firms in small or emerging mar- kets, we have to estimate betas by looking at fi ...

financing are generally very different from the cost of equity and the cost of financ- ing for a firm should reflect their costs ...

mate the synthetic ratings for emerging market firms. The first is that the synthetic rat- ings may be skewed by differences in ...

fault spread for AAA rated bonds in the United States was only 0.75%, there is the added consideration that Embraer is a Brazili ...

2.We will also capitalize operating leases and treat these expenditures as financ- ing expenses. (iv) Book Value versus Market V ...

the current cost of debt for the company. Thus, the market value of $1 billion in debt, with interest expenses of $60 million an ...

ILLUSTRATION4:ESTIMATING A BOTTOM-UP BETA FOR TITAN CEMENTS—JANUARY2000. To estimate a cost of capital for Embraer, we again dra ...

are changing rapidly over time, it is dangerous to base value estimates on informa- tion that is this old. Instead, use more rec ...

projections should reflect continuing operations and should not include any items that are one-time or extraordinary. Putting th ...