Questions-DCF.

Slides:

Advertisements

Similar presentations

Chapter 13 Learning Objectives

Advertisements

Present and Future Value Translating cash flows forward and backward through time.

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Discounted Cash Flow Valuation Chapter 5.

Stocks and Their Valuation

9-1 CHAPTER 9 Stocks and Their Valuation Features of common stock Determining common stock values Preferred stock.

Stocks and Their Valuation Chapter 10  Features of Common Stock  Determining Common Stock Values  Preferred Stock 10-1.

4-1 Common Stock Valuation Part I: Difficulties Uncertain cash flows Uncertain cash flows Equity is the residual claim on the firm’s cash flows Equity.

The DDM and Common Stock Valuation Some quick examples, courtesy of Harcourt –The Effect of Evolving Growth Rates –Valuation via Operating Cash Flow.

THE CAPITAL ASSET PRICING MODEL (CAPM) There are two risky assets, Stock A and Stock B. Now suppose there exists a risk- free asset — an asset which gives.

Valuation and Characteristics of Common Stocks Financial Management B 642.

The McGraw-Hill Companies, Inc., 2000

Calculating the Cost of Capital MGT 4850 Spring 2008 University of Lethbridge.

©Cambridge Business Publishers, 2013 FINANCIAL STATEMENT ANALYSIS & VALUATION Third Edition Peter D. Mary LeaGregory A.Xiao-Jun EastonMcAnallySommersZhang.

GBUS502 Vicentiu Covrig 1 Stocks and their valuation (chapter 9)

13- 1 McGraw Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved Fundamentals of Corporate Finance Sixth Edition Richard.

FIN303 Vicentiu Covrig 1 Stocks and their valuation (chapter 9)

The Value of Common Stocks

8-0 Stock Valuation Chapter 8 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Kelvin Xu Slides prepared by: Asthon Wu, Garrett Kuhlmann.

The value of common stocks

The Time Value of Money Translating Cash Flows Forward and Backward in Time.

CHAPTER 9 Stocks and Their Valuation

Future Value 1- Ahmad plans to retire in fifteen years. Can he afford a $250,000 condominium when he retires if he invests $100,000 in a fifteen-year Mellon.

Valuing Business Methods of valuation DCF valuation (e.g. using WACC) DCF valuation (e.g. using WACC) Relative valuation (comparables) Relative valuation.

Intro to Financial Management Equities. Review Homework Types of bonds Bond risks Bond valuation.

8-0 Cash Flows for Shareholders 8.1 If you buy a share of stock, you can receive cash in two ways The company pays dividends You sell your shares, either.

Corporate value model Also called the free cash flow method. Suggests the value of the entire firm equals the present value of the firm’s free cash flows.

Introduction to Discounted Cash Flow Valuation Nicholas Ramm Finance Sector, Madison Investment Fund October 29, 2007.

Discounted cash flow; bond and stock valuation Chapter 4: problems 11, 19, 21, 25, 31, 35, 45, 51 Chapter 5: problems 4, 7, 9, 13, 16, 20, 22, 33.

8-1 Stocks and Their Valuation. 8-2 Cash Flows for Stockholders If you buy a share of stock, you can receive cash in two ways The company pays dividends.

CHAPTER 8 Stocks and Their Valuation

1 Loose Ends. 2 Closed End Funds You are investing in a closed end mutual fund that invests in stocks. Given the risk of the stocks it invests in and.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Cost of Capital Cost of Capital - The return the firm’s.

Managing Money 4.

Chapter 9 Valuing Stocks. 9-2 Stock Prices, Returns, and the Investment Horizon Common Stock - Ownership shares in a publicly held corporation. What does.

Estimating the Value of ACME 1. Steps in a valuation Estimate cost of capital (WACC) – Debt – Equity Project financial statements and FCF Calculate horizon.

Chapter 12 Fundamentals of Corporate Finance Fifth Edition Slides by Matthew Will McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc.

9-1 CHAPTER 9 Stocks and Their Valuation Outline  Features of Common Stock  Different approaches for valuing common stocks  Preferred stock.

Finance Questions Assignment Student’s Name Course Title: Course Code: Professor Name: Date:

Options and Corporate Finance

Time Value of Money Annuity.

Stocks and Their Valuation

Managerial Finance Session 4c

Managing Money 4.

Stocks and Their Valuation

Questions-DCF and NPV.

Chapter 13 Learning Objectives

13 Equity Valuation Bodie, Kane, and Marcus

Stocks and Their Valuation

Financing and Valuation

FINA 635: Managerial Finance

Time value of money 1. You are able to pay mortgage payments of $800 a month for thirty years. The interest rate is 24 percent, compounded monthly. What.

Chapter 13 The Weighted Average Cost of Capital and Company Valuation

Chapter 13 The Weighted Average Cost of Capital and Company Valuation

Cost of capital (Chapter 9)

Midterm Preparation 3/2017 Dr. Sarina.

Rockboro Advanced Systems International , Inc.

DCF Valuations I.

Final SUMMER 2018.

Time Value of Money Multiple Cash Flows.

CH14 Operating-Income-Based Valuation

Stocks and Their Valuation

Common Stock Valuation

The Weighted Average Cost of Capital and Company Valuation

Example 1: Because of general price inflation in the economy, the purchasing power of the Turkish Lira shrinks with the passage of time. If the general.

Miss Faith Moono Simwami

Managing Money 4.

Annuity and Perpetuity

Presentation transcript:

Questions-DCF

Question (1) You forecast the following cash flows stream for Resume Inc. for the next four years What is the value (share price) of this company? If share price is $140, would you like to buy it? Year Free Cash Flows 1 $100,000,000 2 $150,000,000 3 $200,000,000 4 $250,000,000 Number of Shares Outstanding 20,000,000

Question (2) Let’s assume that growth rate of FCF is 2%, what is the terminal value of the firm at t=4? With steady state growth rate of 2%, would you like to buy this company? What if growth rate is 5%?

Question (3) Given an interest rate of 6.2% per year? What is the value at date t=7 of perpetual stream of $3,500 payments that begin at date t=15?

Question (4) You are planning to save for retirement over next 30 years: $800 in stock account a month (10%) $400 in bond account a month (6%) How much can you withdraw each month from your account assuming 25-year withdrawal period? (let’s assume when you retire, you will combine your money into an account with a 7% return)