Date: Tuesday, May 1, 2007
Read:
1. Comments on Capital Cash Flow Valuation
2. A Note on Capital Cash Flow Valuation (9-295-069): for your future reference
Assignment:
We will finish our conversation from the last class and review various approaches to valuation.
Consider a range of valuation challenges such as IPO’s, capital budgeting, strategic acquisitions and highly levered transactions.
1. What do you see as the attractive features of various valuation methodologies in tackling each type of situation?
2. What are the main strengths and weaknesses of each of the following valuation approaches?
a. Multiples
b. Option Pricing
c. Specific Asset Values
d. Weighted Average Cost of Capital Approach to DCF
e. Adjusted Present Value Approach to DCF
f. Equity Residual Approach to DCF
g. Adjusted Present Value Approach to Capital Cash Flow Valuation