Monday, August 9, 2010

Chapter 13 study guide

CORPORATE VALUATION

Topical review
  • Determine the value of a corporation by valuing two components: assets-in-place and nonoperating assets
  • Use the corporate valuation model determine the value of operations for a company and determine the price per share of outstanding stock
    • Constant growth and multi-stage
  • Allocate corporate value to claimholders
    • Equityholders get the residual
  • Describe four drivers of corporate value
  • Define terms and discuss different areas of corporate governance
    • Composition and election of boards of directors
    • Provisions protecting a company from takeovers
Definitions
  • Corporate valuation - assets-in-place, nonoperating assets, free cash flow, market value added, economic value added
  • Corporate governance - value-based management, poison pills, greenmail, interlocking boards of directors, restricted voting rights
Numerical problems from textbook
ST-1, #1 (to review FCF), 7

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