AFM272 Study Guide - Midterm Guide: Net Present Value

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Two year: dividend discount model ( not really tested, intrinsic value based on dcf of future cash flow, valuation based on comparable trading values, valuation based on comparable transaction. States that pv of an equity = pv of dividends + capital. Price of the stocks of future stock value will be the value of all expected dividend. Uses a discounted free cash flow model to answer. Value of the firm to all investors, including both the question equity and debt holders enterprise value exceeds it current market value. Market value equity= enterprise value market value debt +cash. Enterprise value = mv equity +debt cash. Help acquirer to find out whether the investment. Intrinsic value: annual free cash flow, terminal value, discount rate, calculate : npv of annual cash flow + terminal. Free cash flow = ebita esimated cash taxes cap ex. Ongoing future value of the corporation, once it has reached steady state ( financial position has stabilized) value.

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