free cash flows Discounting to reflect stub year and mid-year adjustment Terminal value using growth in perpetuity approach Terminal value using exit multiple approach Calculating net debt Shares outstanding using the treasury stock method Modeling the weighted average cost of capital (WACC) Sensitivity analysis using data tables Modeling synergies ***************************** SAMPLE PAGES FROM TUTORIAL GUIDE ***************************** DCF in theory and in practice DCF in theory • The DCF
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valuation methods that could be used to evaluate this company. Finding a method that valuates the stand-alone value is difficult. The stand-alone value should be dependent upon the firm’s own assets and projected future income. We decided to evaluate this company based upon two methods: The Discounted Cash Flow Method and the Comparable Companies Method. Discounted Cash Flow Method takes the forecast free cash flows during forecasted horizon. Then we estimate the cost of capital (weighted average cost
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A. METHODOLOGIES: 1. The Weighted Average Cost of Capital (WACC) Approach: This method offers a wide range of advantages. For instance‚ the Capital Assets Pricing Model (CAPM) is employed in the calculation of the Cost of Equity. Thus‚ the discounted rate of 7.58 percent used in figure 1.12 Appendix is likely to be precise. The total value of the firm is $4.73 billion. Nonetheless‚ in view of the probabilities of forecasting errors in the estimation of cash flows‚ the degree of precision does
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to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? WACC is the weighted average cost of capital. It can be calculated as: WACC = (Weight of funding source 1) x (Cost of funding source 1) + … + (Weight of funding source n) x (Cost of funding source n) Usually this will be simply: WACC = (Percentage of debt) x (Cost of debt) + (Percentage of equity) x (Cost of equity) It is important to estimate a firm’s cost of capital for the appraisal
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fulfillment for requirements of the courseMergers and Acquisitions (2012-2013)ByGroup K On19 November 2012 | Contents EXECUTIVE SUMMARY 3 Why does Herbert Kohler wants to do the recap 4 Calculation of Enterprise value 4 Using Discounted cash flow method 4 Dividend Growth Model 7 Comparable Companies Analysis 8 Valuation Summary 9 Justifying the share price of $ 55‚400 10 Defending $270‚000 as share value 10 Final advice to Herbert Kohler 10 EXECUTIVE SUMMARY In May 1998‚ Kohler Co. offered
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Written Report NIKE INC.‚ COST OF CAPITAL CASE REPORT Submitted to: Mr. Mieczyslaw Grudzinski Report date: 27 February 2014 BBA Finance & Accounting Semester 6‚ Academic year 2013-2014 Group Member: Tra My Nguyen 24458 Anna Kulishova 24444 Kaihao Zhang 25545 Zakariae Mokhliss 27727 NIKE INC.‚ COST OF CAPITAL CASE REPORT INTRODUCTION Our group was assigned to produce a report on the Nike Inc.: Cost of Capital case study as a component
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5) | The MIRR and NPV decision criteria can never conflict. The IRR method can never be subject to the multiple IRR problem‚ while the MIRR method can be. One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption. The higher the WACC‚ the shorter the discounted payback period. The MIRR method assumes that cash flows are reinvested at the crossover rate. | A; $37.05 YR1
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What are the strengths and weaknesses of these criteria as opposed to net resent value? On which criteria would you base your recommendation? 3. Evaluate the forecast. Are all relevant cash flows present? Are the assumptions reasonable? Should the cost of new sales recruits be included in the forecast? 4. If‚ in response to the question above‚ you believe the analysis should be modified‚ do so and prepare to discuss the results you obtain. What assumptions are the "key drivers" of your results
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JetBlue IPO WACC The estimation of cost of capital for JetBlue proved to be a difficult process. Considering the company has an unfavorable capital structure‚ due to the fact that they are acquiring a large number of aircrafts‚ simply taking the weights of debt and equity are not acceptable. In order to accurately judge the discount rate the multiples method is necessary. The comparison was to a leading low-fare airline company‚ Southwest. Another critical point is that taking the book
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Valuation Report WAL-MART STORES‚ INC. Table of Contents Legal Disclaimer i Executive Summary 1 1 Company Overview 1 2 Valuation Methods Used 1 3 Fundamental Valuation 1 4 Market Valuation 1 5 Liquidation Value 1 Appendix 1 * Legal Disclaimer This valuation is subject to the following assumptions and limiting conditions: 1. Information‚ estimates‚ and opinions contained in this report are obtained from sources considered to be reliable. However‚ we assume no liability for
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