14

Valuation

Valuation methods

Assets

Market methods

Multi-period dividend discount models

Free cash flow valuation

Adjusted present value

Economic profit

Exercise

Summary

 

File: MFMaths3e_14.xls

VALUATION METHODS

Valuation models use time value of money principles or simpler market principles to value assets, stock and shares or the perceived value of future benefits. Valuation by different methods does not necessarily produce the same answers and the market employs a wide variety of methods in order to ascertain underlying value. The purpose of this chapter is to set out some of the basic mathematics for valuation. Methods fall into these main categories:

  • asset and adjusted asset valuations;
  • dividend models;
  • market methods;
  • free cash valuation. ...

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