Valuation Flashcards
1
Q
What does the cost of equity compensate for?
A
Time value of money & Risk of the investment
2
Q
What tax rate should you use in a DCF?
A
Marginal Tax rate
3
Q
Formula for levered FCF (same as FCF to equity)?
A
4
Q
What is control premium?
A
In return for premium, acquirer of a company gets the right to control decisions regarding the target firm’s business and underlying cash flows
5
Q
Could you use Revenue / Equity Value?
A
This may happen, only if company has a negative Net Financial Position that EV is equal to Eqt Value
6
Q
What are your primary considerations when looking at P/E ratios?
A
7
Q
You are given 2 companies with different P/E ratios. Which would you buy? Why?
A
