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Enhancements to the Core Model - Part II
- Tax Depreciation (0 post(s))
- New CapEx (1 post(s))
- Tax Schedule (7 post(s))
- Residual Income (6 post(s))
- EVA Analysis (10 post(s))
Last 10 posts
Negative EVA
Hi I revised the calculation on EVA using Rirchard S's method as per the prior thread below, however this yields negative EVA through the projection years hence TV as % of TEV is >100%, I guess this renders EVA useless in valuing the company right? Which also means from EVA perspective, it is re... Read More
Hi I revised the calculation on EVA using Rirchard S's method as per the prior thread below, however this yields negative EVA through the projection years hence TV as % of TEV is >100%, I guess this renders EVA useless in valuing the company right? Which also means from EVA perspective, it is re... Read More
residual income (application in real life) - 4 questions
Hi 1. is there a scenario where residual income will be helpful in valuing a publicly listed company? 2. What would be the objective of using residual income in such scenario? 3. is this method more useful for valuing certain sectors? 4. would it be helpful in valuing any listed company in... Read More
Hi 1. is there a scenario where residual income will be helpful in valuing a publicly listed company? 2. What would be the objective of using residual income in such scenario? 3. is this method more useful for valuing certain sectors? 4. would it be helpful in valuing any listed company in... Read More
mid month convention for real estate (new capex)
why do you use month 7 for year 1 and then month 8 for year 2 to 5? Why not use month 8 for year 2, month 9 for year 3 etc?
why do you use month 7 for year 1 and then month 8 for year 2 to 5? Why not use month 8 for year 2, month 9 for year 3 etc?
mid month convention for real estate (new capex)
why do you use month 7 for year 1 and then month 8 for year 2 to 5? Why not use month 8 for year 2, month 9 for year 3 etc?
why do you use month 7 for year 1 and then month 8 for year 2 to 5? Why not use month 8 for year 2, month 9 for year 3 etc?
Capital charge under EVA
Hi, I think the capital charge is supposed to be calculated using the prior year's ending total capital. So, 2006's capital charge should be 11% of 2005's total capital or $87,949, or $9,674; 2007's should be $10,956, and so on. This is using the figures from the core model not from the video. Is th... Read More
Hi, I think the capital charge is supposed to be calculated using the prior year's ending total capital. So, 2006's capital charge should be 11% of 2005's total capital or $87,949, or $9,674; 2007's should be $10,956, and so on. This is using the figures from the core model not from the video. Is th... Read More
Using book value in Residual Income
I think you made three mistakes in how you calculated equity value using RI. 1) You forgot to add the current book value to your valuation estimate. You should either add cell I12 to K25-L25, or better, bring in the 2005 book value from the core model ($53,171) in cell H12. 2) Equity charges s... Read More
I think you made three mistakes in how you calculated equity value using RI. 1) You forgot to add the current book value to your valuation estimate. You should either add cell I12 to K25-L25, or better, bring in the 2005 book value from the core model ($53,171) in cell H12. 2) Equity charges s... Read More
Core Model Enhancements - Tax Schedule
In the tax schedule tab, the formula for cells G18:K18: Why is amortization of other intangibles not also added to Pre-Tax Income (GAAP) to calculate the Income Tax Expense (GAAP)? To be more specific, the current formula in G18 is =(G7+G10)*$G$25. Is there any reason why =(G7+G10+G11)*$G$25 wou... Read More
In the tax schedule tab, the formula for cells G18:K18: Why is amortization of other intangibles not also added to Pre-Tax Income (GAAP) to calculate the Income Tax Expense (GAAP)? To be more specific, the current formula in G18 is =(G7+G10)*$G$25. Is there any reason why =(G7+G10+G11)*$G$25 wou... Read More
Enhancements to the core model- Part II EVA analysis
Hi, I am watching the video - EVA analysis. The total capital (debt + equity) figures that you provided in the downloaded template are different from the figures that are showing in your template on the video. Thus, I have a different valuation base on the downloaded template. For 2006, the figure ... Read More
Hi, I am watching the video - EVA analysis. The total capital (debt + equity) figures that you provided in the downloaded template are different from the figures that are showing in your template on the video. Thus, I have a different valuation base on the downloaded template. For 2006, the figure ... Read More
Hi from the course, I see that you are using total capital to calculate capital charge. I was reading up on Damodaran's explanation on this as well and don't understand that, can you elaborate? "In cases where firms alter their capital invested through their operating decisions (for example, by usin... Hi from the course, I see that you are using total capital to calculate capital charge. I was reading up on Damodaran's explanation on this as well and don't understand that, can you elaborate? "In cases where firms alter their capital invested through their operating decisions (for example, by using operating leases), the capital and the after-tax operating income have to be adjusted to reflect true capital invested." Does that mean the EBIT and total capital has to be scrubbed/adjusted before using it for EVA? How do you do that and is that necessary when you model out listed companies? Link: http://people.stern.nyu.edu/adamodar/New_Home_Page/lectures/eva.html His comments: Many firms use the book value of capital invested as their measure of capital invested. To the degree that book value reflects accounting choices made over time, this may not be true. In cases where firms alter their capital invested through their operating decisions (for example, by using operating leases), the capital and the after-tax operating income have to be adjusted to reflect true capital invested. Read More