Comprehensive Valuation Application Key Features:
1. Supports two of the widely used Valuation Models
a. Adjusted Present Value (APV) valuation model
b. Weighted Average Cost of Capital (WACC) Valuation model
2. Un-lever and re-lever Beta
3. Cost of Capital using Capital Asset Pricing Model (CAPM)
4. Cost of Capital using WACC
Detail:
Adjusted 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).