Session 3: Valuation Introduction (completed) and Cashflow Consistency
from Aswath Damodaran Hosted by Aswath Damodaran
This class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles, with the first principle being consistency, where your cash flows match up to your discount rates. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:favicon.icoThis post is dated, and the India story seems to have displaced the China story, and Sustainability, AI and the Metaverse have entered the conversation. The more things change, the more they stay the same! After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the different ways of approaching valuation (Dividend Discount model, FCFE model, firm valuation) and the roots that they share, and how they result in different estimation processes. . Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.pdfSlides: https://nyu.box.com/s/z0fr1vd7ypq0ffpjy9nydd4brnp2sj8zPost class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3atest.pdfPost class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session3asoln.pdf
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