Lecture 12 spr 10 - HighR&DLow P/B1 Low P/E...

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1. Copy in your implied price formula into any cell. You can use a white font to ‘hide’ the price. 2. Set up the rows and columns with the dimensions you want and the appropriate values. mn. The row is the cell on your spreadsheet that contains the parameter listed horizontally. The column is the cell on the spreadsheet that contains the par High P/E Future Abnormal earnings Current Abnormal earnings Low P/E Future Abnormal earnings High P/B Current Abnormal earnings Low P/B Future Abnormal earnings Low P/E High P/B High P/E High P/B Current Abnormal earnings Low P/E Low P/B High P/E Low P/B ctors Affecting price/earnings ratios and price/book ratios Spring 2010 NBA 5060 Lecture 12 – Valuation and Sensitivity Analysis 1. Sensitivity Analysis 2. Multiples 3. Summary of differences between residual income and DCF Lecture 12 Page 1 of 12
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Sensitivity Analysis The inherent unpredictability of the future makes all forecasts subject to error. To deal with this unpredictability, a sensitivity analysis is used to illustrate
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Lecture 12 spr 10 - HighR&DLow P/B1 Low P/E...

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