Financial Valuation Workbook : Step-by-Step Exercises and by James R. Hitchner

By James R. Hitchner

The source that cuts the training curve in part for valuation professionalsNow valuation pros can grasp virtually each functionality for many valuation occasions. The monetary Valuation Workbook, 3rd version publications readers via a whole enterprise valuation with crucial instruments for speedy reference. up-to-date and extended bankruptcy at the means of getting ready a Valuation- buyer Workflow approaches from Read more...

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The source that cuts the educational curve in part for valuation execs Now valuation execs can grasp nearly each functionality for many valuation occasions. The monetary Valuation Read more...

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The percentages were then multiplied by the equity and debt discount rates calculated earlier (21 percent and 8 percent) and then summed to arrive at the WACC discount rate. 8 percent. qxd 2/23/11 3:24 PM Page 40 40 FINANCIAL VALUATION WORKBOOK EXERCISE 57: Using the information in the text, calculate the weighted average cost of capital for LEGGO. __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ EXERCISE 58: Which methods can be used to determine the weights in the weighted average cost of capital?

False The resulting amount for each year (adjusted income before income tax) was then averaged. We believe a straight average is appropriate due to the cyclical nature of the Company. However, the Company changed year-ends in 20X4. Since we have nine months of data at December 31, 20X4, an adjustment was made accordingly. EXERCISE 34: In the valuation of LEGGO, the analyst decided to use a straight average of the adjusted income before income taxes for five historical years. Besides a straight average, what other method(s) can be used to determine the appropriate cash flow to be capitalized into perpetuity?

H. i. Price/earnings Invested capital/revenues Price/gross profits Invested capital/book value of equity Invested capital/EBITDA Invested capital/EBIT Price/assets Invested capital/debt-free net income Invested capital/debt-free cash flow EXERCISE 73: When using the guideline public company method, at what point in time are the prices of the public companies’ stock valued? a. b. c. d. 30-day average As of valuation date Six-month average Three-year average EXERCISE 74: What type of value is the result of the application of the guideline public company method?

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