... 8 Time value of money ................................................................................................ 11 An examination of the GEICO acquisition in hindsight........................................... 13 Limitations of Discounted Cash Flow ...................................................................... 15 Limitations of this Analysis ...................................................................................... 16 Issues for subsequent research ...............
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Value of simple interest: [pic] ➢ Present Value of simple interest: [pic] ➢ Future Value of compound interest for single cash flow: [pic] ➢ Present Value of compound interest for single cash flow: [pic] ➢ Future Value of compound interest for multiple cash flows: [pic] ➢ Present Value of compound interest for multiple cash flows: [pic] ➢ Future Value of continuous compounding: [pic] ➢ Present Value of continuous compounding, [pic]
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enhance their exposure in mid-price footwear and apparel lines where they would then commit to cut down various expenses that were occurring. The stock market was responding to various signals to the changes Nike was making therefore, Ford did a cash flow estimation while she asked for help. Ford asked her new assistant, Joanna Cohen to estimate Nike’s cost of capital because her forecast seemed to be incorrect. Ford’s forecast showed that Nike had a discount rate of 12% and was undervalued at it
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to talk to the directors of Childtime about an offer to purchase a significant stake of OLC. Dr. Whitehead wondered how he should prepare for the upcoming negotiations. Issue: In order to determine OLC’ cost of capital for the discounted cash flow valuation, we can collect recent financial market date. Solution & Implementation: Dr. Whitehead has three reasons to reject the FirstService: first, he did not think that the purchase price was sufficient. Second, he did not think
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Answer: There are several methods of valuations, below are just a few: Discounted cash flow analysis (DCF) – this is considered one of the most thorough methods to value a company due to the fact that relies on free cash flows. There are two ways using the DCF method one, using the adjusted present value or the weighted average cost of capital, which shows a company how much capital is required for future income flow. Using this method gives us a more realistic thing to an intrinsic stock value
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2. Analysis Model 3 3. Company Overview 3 4. Industry Outlook 3 5. Company Evaluation 4 Free Cash Flow Estimation 4 Cost of Equity, Cost of Debt, WACC Calculation 5 Discounted Cash Flows and Company Evaluation 5 6. Sensitivity Analysis 6 7. Final Recommendations 6 8. Appendix 7 Appendix 1: Historical Free Cash Flow Analysis 7 Appendix 2: Historical Free Cash Flow Analysis 8 Appendix 3: Growth Estimations 9 Appendix 4: 2012 Operating Expense Growth Estimation 10
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Merger or Buyout.................................................7 Vertical Integration ................................................................8 Leveraged Buyouts ............................................................. 10 The Discounted Cash Flow Model ..................................... 11 The Leveraged Buyout Model ............................................ 12 The SML Approach ............................................................ 13 LBO Price ..........................
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Angola Report No. 11/513. For inflation the values were deduced from the consumer price index (end of period) because later on when we refer to any period we will be referring to the term of the same period, for example when discounting the Free Cash Flow (FCF) for each given period with the appropriate annual discount rate. 2010 Expected inflation Expected real GDP growth 2011 10,80% 8,10% 2012 11,20% 9,20% 2013 7,00% 8,60% 2014 6,00% 8,30% 2015 6,00% 8,20% ° The effect of the business growth
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other asset groups. The ship generates its own cash flows. In the current operating year, pirates have entered the area where the cruise ship operates. As a result of this incursion, the ship experienced thirty percent lower cash flows of $1.0 million in the current year. The company does not anticipate this will change in the near-term. This change may require the company to consider an impairment loss on the asset since the fair value (future cash flows) does not exceed the carrying cost of the boat
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Financial Statement Analysis Session #1: Fundamental Analysis and Valuation March 2015 In-Mu Haw (许 仁茂) 1 Create value through acquisition to build brands (over 100) 2 Lenovo vs. HP Stock Price Lenovo created value through acquisitions Poor acquisition (overpaid: $8.8B) $18 million in 2013 3 Deloitte Report Chet Wood, Managing Partner of Deloitte LLP, Merger & Acquisition Services: • • About 70 percent of all health plan M&As fail to create meaningful shareholder value. CFOs and management
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