Graphical Summary of the Basic Ideas on Valuation
4 Pages Posted: 29 Mar 2006
Date Written: March 20, 2006
This is a summary of the basic ideas on valuation depicted as a conceptual map. Under the assumption that Capital Asset Pricing Model, CAPM, works and that the discount rate for the tax savings is Ku, I show the sequence of calculations and interactions among the variables, beta, values, cash flows and discount rates. We might consider that Ku is the origin of everything.
Note: The Spanish version is available at: http://ssrn.com/abstract=892488
Keywords: WACC, valuation methods, cash flows
JEL Classification: D61, G31, H43
Suggested Citation: Suggested Citation