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Unformatted text preview: DFCF (FCFF) indirect firm approach: o Compute unlevered cash flows o Discount at WACC Incorporates financing, which is left out of unlevered cash flows) Relative capitalized earnings approach: o P0 = P/E multiple x forecasted EPS for your firm o Use comparables for multiple o High risk: use low multiple o High growth potential: use high multiples o If you use proper comparables then it will be very rare to find drastically different P/ E multiples EV/ EBITDA: see slides Comparable transactions: o For mergers look at premiums paid for similar transaction...
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