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Day 25-Ch 13-12.5.11

Day 25-Ch 13-12.5.11 - Day25 Chapter13:FirmValuation...

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Business Management 201 Day 25 Chapter 13: Firm Valuation December 5, 2011
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Day 25 Agenda 1) Late Work Deadline December 7 at 11:59  PM 2) Final Exam Vote 3) Email Final Review Questions by Tuesday 4) Final Exam Review on Wednesday 5) Additional Final Exam Review Sessions: Thursday 5:00 PM-7:00 PM 3108 JKB (Professor Larson) Friday 11:00 AM-1:00 PM 151 TNRB (Devin) Saturday 9:00 AM-11:00 AM 151 TNRB (Rebecca) 1) Please Complete the BYU Course Evaluation 2) Chapter 13: Firm Valuation
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Thought for the Day  “Brothers and sisters, I testify that no one of us is  less treasured or cherished of God than  another. I testify that He loves each of us— insecurities, anxieties, self-image, and all.  He doesn’t measure our talents or our looks; He  doesn’t measure our professions or our  possessions. He cheers on every runner, calling  out that the race is against sin, not against  each other.  I know that if we will be faithful, there is a  perfectly tailored robe of righteousness ready  and waiting for everyone, “robes…made…white  in the blood of the Lamb.”    May we encourage  each other in our effort to win that prize is my  earnest prayer.”   ~Jeffrey R. Holland,  “The Other Prodigal,” Ensign, May 2002
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Chapter 13:  Chapter 13:  Firm Valuation Firm Valuation
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Mind Map There are many circumstances  which require the  valuation of an  entire firm .    There are also  several methods  that  we can use to calculate this value.   The point of this chapter is to pull  together concepts that we’ve already  learned and apply them to  firm  valuation .
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Mind Map Learning Objectives: Identify the methods used in firm  valuation Calculate values with DCF and  Comparables Articulate the difficulties of each  method Articulate the various caveats of  valuation and identify the directional  impact on value of each
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Key Words/Concepts: Replacement Cost, DCF, Comparable Multiples  Tangible vs. Intangible Assets Gordon Growth Model FCFF  and FCFE Firm Value Control Premium Liquidity Discount Mind Map
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Valuation Applications Why?: Buy/Sell Acquisition/Divestiture Partnership Trouble Understanding Market Divorce 
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Three Valuation Methods 1) Replacement Cost Cost to Replace the Firm 2) Discounted Cash Flow (DCF) Discount the  Relevant  CFs 3) Comparables Comparison to  Known  Values
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Valuation Method #1:  Valuation Method #1:  Replacement Cost Replacement Cost
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Replacement Cost Approach 1) Left side of Balance Sheet (Assets): Tangibles:  appraised/estimated value Intangibles:  patents, customer list, reputation,  synergies Note: Intangibles are much more difficult to value.
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