Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a (ii) An analyst has estimated the value of a company using two valuation methodologies. The discounted cash flow (DCF) value is $200 million, comparable
a (ii) An analyst has estimated the value of a company using two valuation methodologies. The discounted cash flow (DCF) value is $200 million, comparable recent transactions' value is $225 million. The purchase price paid for the recent comparable transaction included a 20% premium. The analyst has greater confidence in the comparable transaction method and therefore gives a weight of 60% to this methodology, with 40% weight to the discounted cash flow methodology. Estimate the weighted average value of the firm using these two valuation methodologies and using the weights or relative importance the analyst gives to each methodology
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started