Current Equity Value 1 Flashcards
(7 cards)
1
Q
What’s the order
A
Growth rate
Profit before interest and tax
Operating cash flows
Less tax
Less investment
FCF
Cost of capital
Current firm value
Current equity value
2
Q
Operating cash flows
A
PBIT + non cash flows Less tax
3
Q
Less tax
A
PBIT x tax rate
4
Q
FCF
A
Operating cash flows - tax - investment
5
Q
Cost of capital
A
Usually given for this stage
6
Q
Current firm value
A
FCF x (1+ growth rate) / (cost of capital - growth rate)
7
Q
Current equity value
A
Current firm value x equity ratio
