Ch10 - CHAPTER 10 Corporate Value and Value-Based...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 10 Corporate Value and Value-Based Management
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
E. E. (1) (2) Sources of corporate value : Sources of corporate value : Value of Operation +Value of Non-operating Assets $ 420 + $ 100 = $ 520 Value of Equity Value of Equity =Total Corporate Value - Value of Debt - Value of Preferred St. = $520 - $200 - $ 50 = $ 270 1 $21 $420 ( ) 0.05 op FCF V WACC g = = = -
Background image of page 2
E. E. (Continued) (Continued) Market Value Added (MVA) : Market Value Added (MVA) : =Total Value of the firm - Book Value of Debt - Book value of preferred stock – Book value of equity = $520 - $200 - $50 - $210 = $ 60 $0,0 $100,0 $200,0 $300,0 $400,0 $500,0 $600,0 Market Value Sources Market Value Claims Book Value Claims MVA Book Value Equity Market Value Equity Pref. Stock Debt Non Op. Assets Vop
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
F. F. (1)The horizon value is the value of all the free cash flows in year 4 and beyond, discounted back to the beginning of year 4. The formula is: Hv year 4 = [FCF year 4 * (1+g)] / [ WACC - g] PV of Horizon Value @ WACC : $ 398.19
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/16/2009 for the course F 3033 taught by Professor Hh during the Spring '09 term at Maastricht.

Page1 / 6

Ch10 - CHAPTER 10 Corporate Value and Value-Based...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online