--%>

Illustrates financial consultant has valuations of company

A financial consultant obtains various valuations of my company when this discounts the Free Cash Flow (FCF) as opposed to when this uses the Equity Cash Flow. Is it correct?

E

Expert

Verified

No. Various methods of valuation by discounting flows always give the same value (when done correctly). In Fernández (2006 and 2004) shows that 10 methods of valuation through the method of flows discount always give the same value. That result is logical as all the methods analyze identical reality under the same hypothesis; they are different just in the cash flows they use as a starting point into the valuation.

   Related Questions in Corporate Finance

  • Q : Selling or purchasing problem Atlas

    Atlas Realty Company is interested in buying a house and renting it out for $12,000 a year, collecting the rent in advance each year. This will depreciate the house over 25 years; however sell it after 15 years at twice its purchase price. The maintenance expenditures

  • Q : Compute the present value of the

    Is this possible to value companies by computing the present value of the Economic Value Added (EVA)?

  • Q : Is this possible to make money in the

    Is this possible to make money in the stock market while the quotations are going down? And what is credit sale?

  • Q : Explain method to analyze and to value

    Are there any methods to analyze and to value seasonal businesses?

  • Q : Purchaing or leasing problem Crawford

    Crawford Corporation is planning to lease a machine for the next 4 years for an annual lease payment of $3,000 paid in advance, plus a non-refundable initial fee of $3,000. There is a 1-year delay for the tax benefits of leasing. Crawford may buy the machine, deprecia

  • Q : Overview of capital market efficiency

    Provide a brief overview of Capital Market Efficiency?

  • Q : Real estate problem Eric Rowan is

    Eric Rowan is planning to buy a house for $155,000 by borrowing money at the rate of 9%. He expects to rent the house for 5 years, collecting $20,000 annual rent in advance each year. He thinks that he can sell the house for $175,000 after five years. Fulton has incom

  • Q : What is Net Operating Profit after Tax

    What is Net Operating Profit after Tax (NOPAT)?

  • Q : Walt disney WAAC You work in Walt

    You work in Walt Disney Company’s corporate finance and treasury department and have just been assigned to the team estimating Disney’s WACC. You must estimate this WACC in preparation for a team meeting later today....?

  • Q : In which cases use different WACCs Is

    Is this possible to use different WACCs within order to discount each year’s flows? In which cases?