fcfest - FCFE Stable Model FCFE STABLE GROWTH MODEL This...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
FCFE Stable Model Page FCFE STABLE GROWTH MODEL This model is designed to value the equity in a stable firm on the basis of free cashflows to equity, especially when they are different from dividends paid. Assumptions in the model: 1. The firm is in steady state and will grow at a stable rate forever. 2. The firm does not pay out what it can afford to in dividends, i.e., Dividends FCFE. User defined inputs The user has to define the following inputs to the model: 1. Current Earnings per share 2. Capital Spending and Depreciation per share 3. Change in working capital per share 4. Desired debt level for financing working capital and capital spending needs. 5. Cost of Equity or Inputs to the CAPM (Beta, Riskfree rate, Risk Premium) 6. Expected Growth Rate in free cashflows to equity forever.
Image of page 1

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

View Full Document Right Arrow Icon
FCFE Stable Model Page Please enter inputs to the model: Current Earnings per share = $5.45 (in currency) {You can input all the numbers for the aggregate company, if you so desire} Capital Spending/share = $2.00 (in currency)
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern