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DCF Valuation of a Firm

DCF Valuation of a Firm

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Published by lovearun17

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Categories:Types, Research
Published by: lovearun17 on Feb 03, 2010
Copyright:Attribution Non-commercial


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Corporate Valuation
DCF valuation methods
FCF-WACC method
APV (adjusted present value) method
FTE (flow-to-equity) method
Industry comparables method
Corporate Valuation:
We introduce the FCF-WACCmethod.
Of the DCF valuation methods, theFCF-WACC method is the mostwidely used.
We break up assets into operatingand non-operating assets for thepurpose of firm valuation.
Operating assets
Operating assets are non-financial assetsincluding buildings, machines andinventory.
They generate operating incomes, whichare expected to grow.
After-tax net operating profit (NOPAT) netof required investment is called free cashflow (FCF).
The PV of the expected future free cashflows, discounted at the WACC, is thevalue of operations.

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