Brian DeChesare
MAY 3, 2023
Even if you pick the right company, though, the DDM is more difficult to set up and use than a standard DCF because it requires more assumptions and knowledge of the company’s capital structure. Also, the Terminal Value is normally based on a P / E multiple or a Net Income Growth Rate.
Musings on Markets
FEBRUARY 27, 2023
In this section, I will lay out a mechanism for evaluating the effects of borrowing on the cost of funding a business, i.e., the cost of capital, and talk about why firms may under or overshoot this optimal.
Valutico
OCTOBER 20, 2022
Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Cp = Cost of Equity Premium. Discount the Terminal Value. . Add up all the figures you have to arrive at the Net Present Value. Depending on the exact methodology and discount rate used, this could be the Enterprise Value or Equity Value.
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