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,Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf
List the five equivalent methods for firm and project valuation.
Equivalent Methods: Adjusted Present Value, Free Cash Flow to Equity, Free Cash Flow to
the Firm, Dividend Discount Model, Residual Income.
Valuation Methods: Free Cash Flow to Equity, Dividends, Tax Shield Benefit, Free Cash Flow
to the Firm, Economic Profit.
Fully list all the broad steps for calculating the Value Added by the Firm with the Adjusted
Present Value method in Figure 10.2.
a) Take the Free Cash Flow to the Firm and discount at he Unlevered Cost of Equity Capital
to get the Value of the Unlevered Firm.
b) Take the Tax Shield Benefit and discount at the Cost of Risk-free Debt to get the Value of
the Tax Shield.
c) Sum the Value of the Unlevered Firm and the Value if the Tax Shield to get the Value of the
Firm.
d) Subtract Date 0 Capital to get the Value Added by the Firm.
Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf
, Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf
Fully list all the broad steps for calculating the Value Added by the Firm with the Free Cash
Flow to Equity method in Figure 10.3.
a) Take the Free Cash Flow to Equity and the discount at the Levered Cost of Equity Capital
to obtain the Value of Equity.
b) Take the Cash Flow to Debtholders and discount at the Cost of Risk-free Debt to obtain
the Value of Debt.
c) Sum the Value of the Equity and the Value of Debt to get the Value of the Firm.
d) Subtract Date 0 Capital to get the Value Added by the Firm
Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf Financial Modeling Exam 2.pdf