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Value =
FCF1
FCF2
...
FCF r r *=3.6%
= $253.6/$7,036 IP DRP LP MRP
bill r RF r * IP
( 1 WACC ) ( 1 WACC )2
( 1 WACC )Basic earning power rTassets
= EBIT/Total
FVn PV(1 i) n PV(FVIFi,n ) = $492.6/$3,497 = 14.1%
I I ... I n
IPn 1 2
1 n
PV0 FVn FV(1 i) -n FV(PVIFi,n )
(1 i) n i
m
EAR 1 nom 1
(1 i) n 1 m
FVA n PMT PMT (FVIFA i,n ) mn
i i PV
PMT
FVn PV1 nom
FVAD n FVA n (1 i) PMT (FVIFA i,n ) (1 i) m i
1 (1 i) -n ROIC
NOPAT
PVA 0 PMT PMT (PVIFA i,n )
i Operatingcapital
PVAD 0 PVA 0 PMT (PVIFA i,n ) (1 i) n
r̂ Pi ri
n
i 1
( r ˆr ) P
i 1
i
2
i
t
1
CFt PVIFi ,t
n n
PV CFt n
t 1 1 i t 1 ( r t r Avg )2
t 1 CV
ˆr
FV CFt 1 i CFt FVIFi ,t
n 1
n n
t
n
t 1 t 1
ˆrP w iˆri = w AˆrA ( 1 w A )ˆrB
NOWC = OCA – OCL NOWC = C + AR + IN – AP – ACRU i 1
n
NOPAT = EBIT (1-T)
Cov( AB ) ( rAi ˆrA )( rBi ˆrB )Pi
FCF = NOPAT + Depreciation – Gross investment in operating capital t 1
MVA = Market stock + market value of debt – total capita = S Price x S shares – Tot Capt Cov AB n
r ˆrp Pi = w ( 1 w A ) 2w A ( 1 w A ) AB A B
n
2 2 2 2
p
2
A A B Cov( ri , rM ) i
iM
pi
i1 bi
N
INT M 1 ( 1 rd ) N M
2M M
VB INT
t 1 ( 1 r ) t
( 1 r ) N
r ( 1 rd )N ˆr r D
d d d
ˆrp rRF M RF p rps ps
M
2N
INT 2 M
VB
N
VB
INT
Call price Vps
t 1 ( 1 rd 2 ) ( 1 rd 2 ) t 1 (1 rd ) (1 rd ) N
t 2N t
ri rRF (rM rRF )i rRF RPM i
ˆ D1 D 0 (1 g)
Dt
P̂0 P D
Vps ps D
rs rRF (RPM )Firm ˆrS 1 g
t 0
t 1 (1 rs ) rs g rs g rps
P0
D N1
ˆ D1
ˆ D1 D2 DN r g re g
P ... s N P0 (1 F )
0
1 rs 1 rs
1 2
1 rs N 1 rs WACC = wdrd(1-T) + wpsrps + wce*rs
n
CFt
Paybacks Yearbeforefullrecov ery
Unrecov ered costatstartofyear NPV CF0
t 1 (1 r )t
Cashflowduringyear
EBIT NI
BEP ROA
TA TA