Unformatted text preview: Two-Stage FCFE Discount Model Page Comparing DDM and FCFE Models: Two Stage Valuation Inputs for FCFE Calculation Current Net Income = $100.00 (in currency) Current Dividends = $30.00 (in currency) Current Capital Expenditures = $75.00 (in currency) Current Depreciation $50.00 (in currency) Current Revenue = $1,000.00 Current Working Capital = $50.00 (in currency) Net Debt Cashflow = $10.00 Enter length of extraordinary growth period = 5 (in years) Enter growth rate for high growth period = 10.00% Inputs for cost of equity Beta of the stock = 1 Riskfree rate= 5.00% (in percent) Risk Premium= 4.00% (in percent) Enter growth rate in stable growth period? 4.00% (in percent) Return on equity in stable growth = 12.00% Will the beta to change in the stable period? No (Yes or No) If yes, enter the beta for stable period = 1 To reconcile the dividend discount model and the FCFE model, you have to input the foll Do you want to assume that the cash buildup that will occur if dividends < FCFE get reinvested at the cost o...
View Full Document
- Spring '11
- Generally Accepted Accounting Principles, FCFE