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Lecture_12 - Lecture 12 Corporate Valuation I BD Chapter 11...

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Lecture 12: Corporate Valuation: I BD Chapter 11
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Topics Operating versus Nonoperating Assets Corporate Valuation Pricing Common Stock Comparison with the Dividend Growth Model
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Operating Assets Assets-in-place Tangible assets: buildings, machines, inventory, etc. Intangible assets: patents, reputation, customer connection, etc. Growth options: opportunities to expand Growth options arise from a company’s operating knowledge, experience, and other resources. Assets-in-place and growth options produce sales and cash flows We focus on operating assets
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Nonoperating Assets Nonoperating Assets Marketable securities on top the cash needed for operation (short-term investment). Investment in other businesses. Much smaller than operating assets. Ford Corporation: December 2007 Short-term investment of $12.3 billion. Investment in other businesses of 2.3 billion: “Equity in Net Assets of Affiliated Companies”.
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