The discounted value of the Terminal Value (using the Perpetulty method) in your DCF analysis appears too low. The mistake could be: 1. You forgot to grow the last projected year's UFCF by one year before calculating the Terminal Value 2. Your estimated EVEBITDA multiple for the Terminal Value is too low 3. Your Equity Risk Premium needs to be reduced 4. You should discount the Terminal Value over more years 5. You should subtract the risk-free rate while calculating the Cost of Equity to decrease the WACC O1 and 2 3 and 4 1 and 3 2.4 and 14 ands
The discounted value of the Terminal Value (using the Perpetulty method) in your DCF analysis appears too low. The mistake could be: 1. You forgot to grow the last projected year's UFCF by one year before calculating the Terminal Value 2. Your estimated EVEBITDA multiple for the Terminal Value is too low 3. Your Equity Risk Premium needs to be reduced 4. You should discount the Terminal Value over more years 5. You should subtract the risk-free rate while calculating the Cost of Equity to decrease the WACC O1 and 2 3 and 4 1 and 3 2.4 and 14 ands
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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