Valuation: Apv vs Wacc
A Note on Valuation Models: CCFs vs. APV vs WACC
Fabrice Bienfait
Table of Content Introduction..................................................................................................................................... 2 Enterprise Valuation ....................................................................................................................... 2 The Weighted Average Cost of Capital Approach ......................................................................... 2 The Adjusted Present Value Approach........................................................................................... 4 The Capital Cash Flow Approach................................................................................................... 4 Numerical Example ........................................................................................................................ 5 Conclusions..................................................................................................................................... 7 References....................................................................................................................................... 8 Figures and Tables Figure 1: WACC as a Function of the Debt Ratio .......................................................................... 3 Table 1: Assumptions (in €)............................................................................................................ 5 Table 2: WACC Valuation (in €)................................................................................................... 5 Table 3: APV Valuation (in €)........................................................................................................ 6 Table 4: CCF Valuation (in €) ........................................................................................................ 7
Fabrice Bienfait
IFM Final Paper
Page 1 of 8
Introduction In this note we compare and contrast three
Fabrice Bienfait
Table of Content Introduction..................................................................................................................................... 2 Enterprise Valuation ....................................................................................................................... 2 The Weighted Average Cost of Capital Approach ......................................................................... 2 The Adjusted Present Value Approach........................................................................................... 4 The Capital Cash Flow Approach................................................................................................... 4 Numerical Example ........................................................................................................................ 5 Conclusions..................................................................................................................................... 7 References....................................................................................................................................... 8 Figures and Tables Figure 1: WACC as a Function of the Debt Ratio .......................................................................... 3 Table 1: Assumptions (in €)............................................................................................................ 5 Table 2: WACC Valuation (in €)................................................................................................... 5 Table 3: APV Valuation (in €)........................................................................................................ 6 Table 4: CCF Valuation (in €) ........................................................................................................ 7
Fabrice Bienfait
IFM Final Paper
Page 1 of 8
Introduction In this note we compare and contrast three
References: Brealey and Myers, “Principles of corporate finance”, 7th Edition Damodaran, “Investment Valuation”, 2sd Edition Koller, Goedhart and Wessels, “Valuation”, 4th Edition Ruback, “Capital Cash Flows: a simple approach to valuing risky cash flows” Fabrice Bienfait IFM Final Paper Page 8 of 8