Equity value formula
Equity Value | Examples | Explanation (With Excel Template)
Sep 03, 2016 · Charge for equity = cost of equity * beginning book value = r. e * b t-1 Residual earnings until the horizon = earnings – charge for equity = e t – r e * b t-1 Residual earnings beyond the horizon = Previous residual earnings * (1 + perpetual growth rate of residual earnings)
[DOC File]VALUATION: FACTORS AND METHODS
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b. must use a numerical search technique to solve for the value of ESOs and the firm’s equity since it cannot be done algebraically. c. can use the standard Black-Scholes formula to solve for both the value of the ESOs and the firm’s equity. d. The analyst could use any of the approaches listed above. (difficult, L.O. 7, Section 4, b)
[DOCX File]Valuation: Measuring and Managing the Value of Companies
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15.19 a. Since Green is currently an all-equity firm, the value of the firm is the value of its outstanding equity, $10 million. The value of the firm must also equal the PV of the after-tax earnings, discounted at the overall required return. The after-tax earnings are simply ($1,500,000) (1 - 0.4) = $900,000. Thus, $10,000,000 = $900,000 / r0
[DOC File]Chapter 15: Capital Structure: Basic Concepts
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When using EBIT, EBIAT, NOPAT, EBITDA, or FCF as “earnings” the proper formula is Enterprise Value / Earnings, or V/E, not P/E. Enterprise value is the total value of interest bearing debt, preferred stock, and equity, i.e., the Market Value of Invested Capital (MVIC).
[DOC File]Chapter 15
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c. the dividend stream must match the flows to equity in each year. d. the present value of the dividend stream must be equal to the present value of the net cash flows coming into the firm (easy, L.O. 5, Section 5, d) In the flows to equity formula used to solve for common equity, cash flows to equity equal the free cash flows:
[DOC File]CHAPTER 1
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The debt is trading at 90% of book value. The yield to maturity is 9%. Equity: 2,500,000 shares selling at $42 per share. Assume the expected rate of return on Federated’s stock is 18%. Taxes: Federated’s marginal tax rate is Tc = .35. Solution. Market values of debt and equity are D =0 .9*75 = $67.5 million and E= 42* 2.5 =$105 million. D ...
[DOC File]VALUATION: FACTORS AND METHODS
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S / (B+S) = the firm’s equity-to-value ratio. rB = the pre-tax cost of debt. rS = the cost of equity for a levered firm. TC = the corporate tax rate. While the problem does not list Williamson’s debt-to-value ratio or Williamson’s equity-to-value ratio, it does say that the firm’s debt-to-equity ratio is 2.5.
[DOC File]ECON366 - KONSTANTINOS KANELLOPOULOS
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Equity Valuation, Market Efficiency and “Bootstrapping” Bootstrapping is the process under which the price-earnings ratio of an acquiring firm is excessively high because the market misinterprets an increase in earnings per share due to the acquisition as a sign of high earnings-per-share growth in the future.
[DOC File]CHAPTER 1
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Asset value: The value of an asset (a piece of equipment, real estate, a product line or division of a company, or a company) calculated without regard to how it is financed. Enterprise Value (EV) is the value of a company’s interest bearing debt + preferred and common equity + retained earnings at market value as opposed to book value.
[DOCX File]Valuation: Dividends, Book Values, and Earnings
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Using the methodology outlined in Exhibit 6.16, determine equity cash flow for Year 1. Use the growing-perpetuity formula (based on equity cash flow) to compute BrandCo’s equity value. Assume the cost of equity is 12 percent and cash flows are growing at 5 percent.
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