Stocks III: Other DCF models
- The FTE model
- Valuation with the FTE model: An example
- The APV model
- Valuation with the APV model: An example
- Some loose ends
- The big picture
In theory, given the company and the point in time, all discounted cash flow (DCF) models should yield the same intrinsic value. In practice, however, that is rarely the case. Plus, implementing one version of the DCF model is typically easier than implementing another. That’s why in this chapter we’ll discuss the flows-to-equity (FTE) and the adjusted present value (APV) models, two versions of the DCF model that, although less widely used than the WACC model, may be easier to apply in some cases. (Before you start reading this chapter, make sure you’re clear about all ...