djusted Present Value (APV) |
“Base case” valuation of firm (or project) assuming all-equity financing. Discount rate is Ra. Then, add financing side effects to the “base case” valuation: 1. Interest tax shields (PVTS) 2. Costs of financial distress (PVFD)This app allows flexible FCF timing, cost of asset (Ra) as in all equity case and FCF repetition. |
Beta |
Un-lever asset beta from equity beta, debt beta, leverage (debt/equity), tax rate. Re-lever asset beta with cost of debt, leverage (debt/equity) and tax rate to generate levered equity beta. |
Capital Aset Pricing Model (CAPM) |
Generate cost of capital from risk free rate, beta and market risk premium (MRP) |
Weighted Average Cost of Capital (WACC) |
Weighted average cost of capital is weighted average of the after tax cost of debt and cost of equity |
WACC – Valuation |
Values asset/firm from free cash flow (FCF), discount rate, horizon period (time taken to achive matured growth), terminal value (exit value, comparable, Gordon Growth Model). |
