Estimate the cost of capital for your company. (In Module 05 you already estimated the cost of equity. To estimate the cost of capital, you need to include an estimate of the cost of debt and calculate the weighted average cost of capital for your company.)
Estimate the free cash flows to the firm for the future. One way to do this is simply use the current trailing twelve months cash flows as a proxy for the future cash flows.
Calculate the present value of all future cash flows. (You can simply calculate the cash flows in perpetuity with a modest constant growth rate.)
Conduct a relative valuation of your company using one of the metrics discussed in the course readings.
For your comparable firms you should choose 2 or 3 firms that are considered competitors or in a related industry to your firm.
Comparison to Listed Valuation:
From Yahoo! Finance identify and indicate the Market Capitalization and Enterprise Valuation.
Discuss how your valuations from above compare in relation to these amounts from Yahoo! Finance. Assuming there are differences, what might explain such difference
Microsoft is the company.
This question was asked on Dec 12, 2012.
Recently Asked Questions
- What is the primary benefit for the U.S. of a low price for the dollar in the foreign exchange market? A. It makes foreign goods cheaper, helping consumers.
- 56 Greetings if you can help could you please assist me with this question below it is multiple choice... I am counting on you
- WHICH OF THE FOLLOWING WILL NOT REDUCE THE SHARE PRICE? ASSUME AN ALL EQUITY FIRM AND NO INFORMATION, AGENCY, OR LEVERAGE EFFECTS: A) STOCK DIVIDEND B) CASH