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Study Session 9: Equity Valuation: Valuation Concepts

FC Inv = CAPEX?

1. Is there any difference between FC Inv = CAPEX ?

2. Is CAPEX  = Ending Fixed assets - Beginning Fixed Assets - Depreciation?

Discount for Lack of Control

DLOC = 1/ (1-Control premium)

Easy formula to remember. However, I’m just curious at why not DLOC = 1 - Control premium? (Discount + Premium = 1)???

Can someone explain in easy way please?

Thank you.

How do I value this preferred stock in my EV calculation

Hi,

How should I value the following preferred stock in my EV calculation?

Series J 8.38% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847. 

The balance sheet shows $42,748 against the above entry.  I am not sure if I should use the liquidation value, the balance sheet number or some other value in my Enterprise Value calculation for this company.  

Thanks

Book Value/BVPS

Hi all, hope everyone’s studying going as well as it can.

How do we know whether to include minority interest in calculating book value (and BVPS)? On page 436 of the CFA Equity textbook (reading 31), the BB example takes TD’s total equity and only subtracts the book value of preferred shares, leaving in the non-controlling interest in subsidiaries.

However, in one of the TTs (Byran Lee Case Scenario), we’re given the following:

Equity Valuation Methods and Inferences

If all the methods of equity valuation yield varying results,

(1) how must I come to a conclusion of what value an equity security holds?

(2) and on what basis would I have to prefer one valuation method over another?

Equity Valuation Methods and Inferences

If all the methods of equity valuation yield varying results,

(1) how must I come to a conclusion of what value an equity security holds?

(2) and on what basis would I have to prefer one valuation method over another?

a quick question about the DDM

I have a quick question about the DDM dividend discount model.

Do we need to assume that the capital gain growth rate is the same as the dividend growth rate? and why ?

Equity: adding consensus growth rate to dividend yield

Came across a practice problem. The solution provided adds consensus growth rate to dividend yield to arrive returns…..

div yield=3%

consensus growth=5.9%

Ke=3%+5.9%=8.9%

why is it not 3%*(1+5.9%)