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Unformatted text preview: per year. • What is the value of MPR stock? • The Corporate Valuation Model • The Dividend Discount Model is a special case of equity valuation: – The value of a stock is the present value of expected future dividends. • It may not be very helpful to a portfolio manager or an analyst: – How can we find the value of a company that does not pay dividends? – How do you value a division within a company? • Use the Corporate Valuation Model – Discounted cash flow valuation (DCF) – The Corporate Valuation Model (Con’t) • Find the present value of the cash flows that are available for distribution to all of the company’s investors, – They are the free cash flows (FCF) • Discount them at the average rate of return required by all investors, – This is the weighted average cost of capital (WACC), – It represents the average cost of each dollar of financing for a company’s business....
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This note was uploaded on 04/05/2012 for the course FIN 456 taught by Professor Davidweinbaum during the Spring '12 term at Syracuse.
- Spring '12