Download or read book Business Valuation with Attention to Imputed Interest on Equity Increase a Comparison of Alternative Pricing Methods in a Model with Stochastic Profitability written by Stefan Bogner and published by . This book was released on 2018 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: As early as the 1980s, several European countries implemented tax systems with imputed equity interest provisions. Since its tax reform in 2000, Austria has also allowed the deduction of (fictitious) imputed equity interest from the tax base. This paper integrates the resulting tax benefits related to equity into the valuation of corporations. Using the equity method with attention to the deductibility of imputed equity interest, the value of a business is calculated in a multi-period model. In this context, a market-to-book ratio endogenous to the model results for the equity of the valuated business. It is then demonstrated how to apply the APV method in a model with imputed equity interest. For each business - and thus also for an unlevered company - an adjustment is necessary to account for the tax shield resulting from equity financing. Therefore, an unlevered company which does not use equity tax shields has to be chosen as a common denominator in the application of the APV method, in which a closedform solution is presented for the value of this tax benefit. Intertemporal differences in risk make it necessary to use various risk-adjusted term structures of interest rates in the equity method as well as the APV method. Finally, the weighted average cost of capital in consideration of the deductibility of imputed equity interest is derived. A sensitivity analysis is conducted for all value components of a business and the weighted average cost of capital.

Download or read book DCF Valuation and Imputed Interest on Equity Increase Implications of the Austrian Tax System in a Model with Stochastic Profitability written by Stefan Bogner and published by . This book was released on 2005 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: As early as the 1980s, several European countries implemented tax systems with imputed equity interest provisions. Since its tax reform in 2000, Austria has also allowed the deduction of (fictitious) imputed equity interest from the tax base. This paper integrates the resulting equity-related tax benefits into the valuation of corporations. Using the equity method with special attention to the deductibility of imputed equity interest, we calculate the value of a business in a multi-period model. We find that a market-to-book ratio endogenous to the model results. We then demonstrate how to apply the APV method in a model with imputed equity interest. For each business - and thus also for an unlevered company - an adjustment is necessary to account for the tax shield resulting from equity financing. Therefore, an unlevered company that does not use equity tax shields has to be chosen as a common denominator in the application of the APV method, in which a closed-form solution is presented for the value of this tax benefit. Finally, we derive a weighted average cost of capital that considers the deductibility of imputed equity interest. We show that an additional term correcting for equity tax shields is necessary.

Download or read book DCF Business Valuation with Imputed Interest on the Stock of Equity written by Manfred Frühwirth and published by . This book was released on 2004 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the last two decades several European countries implemented tax systems allowing for the deduction of imputed equity interest from a company's tax base. This paper integrates the tax benefits resulting from imputed interest on the stock of equity into business valuation. Three discounted cash flow valuation methods are used to this end: the equity method, the APV method and the entity method. Intertemporal differences in risk require the use of various risk-adjusted term structures of interest rates in the equity method as well as the APV method. Using the equity method we show that the well-known market-to-book ratio of the constant growth dividend discount model holds in a risk-adjusted form. When applying the APV method with imputed equity interest an adjustment is necessary for each business, also for an unlevered company, to account for the tax shield resulting from equity financing. A closed-form solution is presented for the value of this tax benefit. We furthermore derive the WACC under imputed interest on the stock of equity and the adjustment of the cost of equity which is necessary to derive the WACC as a weighted average of cost of equity and debt.

Download or read book The Enterprise Valuation Theory and Practice written by Alina Ignatiuk and published by GRIN Verlag. This book was released on 2009-06-30 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2008 in the subject Business economics - Business Management, Corporate Governance, grade: A, St. Mary's University San Antonio, Texas, language: English, abstract: In a market-driven economy investors are looking for the most profitable placement of their capital. This leads to a redistribution of the recourses on economy-wide scale from industries and companies which use investor’s capital inefficiently and destroy wealth to industries and companies which use investor’s capital efficiently and create wealth. For corporate managers, wealth creation is fundamental to the economic survival of the firm. As suggested by Rapport (2006, pp.67-68) managers that fail (or refuse) to see the importance of this imperative in an open economy do so at the peril of the organization and their own careers. There are several analytical tools which can help to make wise decisions in this field. They range from traditional Dividend Discount model and Free Cash Flow (FCF) model to not so long ago created Economic Value Added (EVA) model of enterprise valuation. At the same time in line with theoretical models for valuing companies there is a market value for companies derived from market supply and demand for their stocks. In general, if we again refer to “one value principle” described in Grant (2003, p.106), both theoretical and market approaches have to lead to the same results. But in reality there is always some discrepancy in those two values which is a result of the influence of the number of factors. Identification and analysis of those factors is of key importance for investors to discover the most profitable investments and for the economy to ensure the most efficient use of capital. The discrepancy between theoretical and market value of the company, however, should not last forever. If it happens then capital market will be sending wrong signals to the investors about on the one hand industries with high potential which use capital productively and create economic profit and on the other hand industries with low potential who waste capital and achieve economic loss. This would lead to a situation when productive industries will face a deficit of capital and unproductive industries will face a surplus of capital. Such inefficient distribution of capital finally would be a threat for the development of a real sector of the economy.

Download or read book Equity Valuation written by Jan Viebig and published by John Wiley & Sons. This book was released on 2008-04-30 with total page 438 pages. Available in PDF, EPUB and Kindle. Book excerpt: Equity Valuation: Models from the Leading Investment Banks is a clear and reader-friendly guide to how today’s leading investment banks analyze firms. Editors Jan Viebig and Thorsten Poddig bring together expertise from UBS, Morgan Stanley, DWS Investment GmbH and Credit Suisse, providing a unique analysis of leading equity valuation models, from the very individuals who use them. Filled with real world insights, practical examples and theoretical approaches, the book will examine the strengths and weaknesses of some of the leading valuation approaches, helping readers understand how analysts: · estimate cash flows · calculate discount rates · adjust for accounting distortions · take uncertainty into consideration Written for investment professionals, corporate managers and anyone interested in developing their understanding of this key area, Equity Valuation: Models from the Leading Investment Banks will arm readers with the latest thinking and depth of knowledge necessary to make the right decisions in their valuation methodologies.

Download or read book Real option approach to business valuation written by Patrick Lommertin and published by GRIN Verlag. This book was released on 2019-02-01 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2013 in the subject Business economics - Business Management, Corporate Governance, grade: 1,6, University of Applied Sciences Essen, language: English, abstract: There are various events to which a company valuation must be created. For the valuation of companies, various valuation methods are available. Most of these approaches are static calculation methods such as the discounted cash flow method. This method is one of the static corporate policies. The response to newly acquired information can not be taken into account and therefore lead to lower ratings from this approach and all other static approaches. This is especially true for young, innovative and dynamic company. To better match the DCF method to the uncertain development of the future, various scenarios can be simulated with different parameters. Nevertheless, there is a reporting date and the mutual influence of the variables can not be adequately represented. The real options approach, which was originally used only for the investment calculation can, also be applied to companies because the company valuation represents a special case of investment analysis. In the boom times of the new economy around the turn of the century was said to have the ROA that it would be a concept that justifies artificial-ly increased corporate values. For this period, the most of literature that deals with the real options approach comes from. With the ROA no independent valuation method is presented, but an extension of the familiar discounted cash flow method. The crux of the extension is the evaluation of action flexibilities in the otherwise static method. The aim of this study is to investigate the real options approach for its suitability as a business valuation method and to identify its strengths and weaknesses.

Download or read book Valuation Methods and Shareholder Value Creation written by Pablo Fernandez and published by Elsevier. This book was released on 2002-09-11 with total page 661 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation Methods and Shareholder Value Creation provides a comprehensive examination of valuation tools and guidance for analyzing and valuing a business. It covers the basics of valuation methods and shareholder value creation in addition to rigorous approaches to discounted cash flow valuation and real options for valuing a company. It highlights quantitative analyses of firm value; emphasizes qualitative management assessments; and integrates data from international companies. By examining eight different methods of discounted cash flow valuation and discussing the pros and cons of each method, the book offers thorough, accessible coverage of corporate valuation. The book provides well-structured guidance for practitioners and MBA students with a background in finance. Highlights quantitative analyses of firm value Emphasizes qualitative management assessments Integrates data from international companies

Download or read book Summary of Gregory R Caruso s The Art of Business Valuation written by Everest Media and published by Everest Media LLC. This book was released on 2022-02-25T11:06:00Z with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Please note: This is a companion version & not the original book. Sample Book Insights: #1 The price of a business is what someone is willing to pay for it. Price includes the quality of the sales process, negotiation, emotion, economic demand, timing, luck, and financing. #2 The process of valuing a business involves applying established analytical methods and preset assumptions to what is known or knowable about the company in order to estimate its value as of a specific date.

Download or read book Recent Trends in Valuation written by Luc Keuleneer and published by John Wiley & Sons. This book was released on 2005-12-13 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt: Conventional valuation techniques take little account of the unexpected outcomes and uncertainties of real life. Real options are one method of tackling these problems in order to give a realistic view in practice rather than simply in the theoretical world. Tom Copeland in his contribution considers the probability that real options will in the future become the standard method of valuation and of evaluating the financial viability of ventures. This book follows past, current and potential future valuation techniques and discusses current trends in this area in the light of the ever-increasing desire to assess and manage risk and uncertainty.

Download or read book Valuation Based on Earnings written by Robert A. G. Monks and published by John Wiley & Sons. This book was released on 2011-04-27 with total page 581 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Valuation for Portfolio Investment "The valuation of securities . . . is as big a subject as they come, running in multi?-dimensions from qualitative to psychological, from static todynamic, from one dominant measure to a complex soup, and using measures that range from those that are internal to the observer to those determined bythe markets. In Corporate Valuation for Portfolio Investment, Bob andhis worthy coauthor cover the full range of valuation methods." From the Foreword by Dean LeBaron Corporate valuation for portfolio investment means determining the present value of future worth. While this may sound like a straightforward task, in reality, it takes time and hard-earned experience to effectively perform this essential financial function. Robert Monks and Alexandra Lajoux understand the difficulty of this endeavor. That's why they have created Corporate Valuation for Portfolio Investment. Filled with in-depth insights and expert advice, this reliable guide addresses the many facets of valuation and reveals what it takes to determine the value of corporate equity securities for the purpose of portfolio investment. Written with the professional investor in mind, Corporate Valuation for Portfolio Investment takes you through a wide range of approaches including those primarily based in assets, earnings, cash flow, and securities prices and discusses hybrid valuation techniques that combine aspects of these four main sources of valuation information. Along the way, it also examines the importance of qualitative measures such as governance and details a variety of special situations in the life cycle of businesses, including stock splits, spin-offs, and pension funding. If you're seeking superior returns from investments in corporate equity, then you have to have a firm understanding of valuation. With Corporate Valuation for Portfolio Investment as your guide, you'll be in a better position to improve your sense of a company's worth and the possible price ranges for buy, sell, and hold decisions.

Download or read book Fiscal Regimes for Extractive Industries Design and Implementation written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2012-08-16 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: Better designed and implemented fiscal regimes for oil, gas, and mining can make a substantial contribution to the revenue needs of many developing countries while ensuring an attractive return for investors, according to a new policy paper from the International Monetary Fund. Revenues from extractive industries (EIs) have major macroeconomic implications. The EIs account for over half of government revenues in many petroleum-rich countries, and for over 20 percent in mining countries. About one-third of IMF member countries find (or could find) resource revenues “macro-critical” – especially with large numbers of recent new discoveries and planned oil, gas, and mining developments. IMF policy advice and technical assistance in the field has massively expanded in recent years – driven by demand from member countries and supported by increased donor finance. The paper sets out the analytical framework underpinning, and key elements of, the country-specific advice given. Also available in Arabic: ????? ??????? ?????? ???????? ???????????: ??????? ???????? Also available in French: Régimes fiscaux des industries extractives: conception et application Also available in Spanish: Regímenes fiscales de las industrias extractivas: Diseño y aplicación

Download or read book Business Valuation written by Z. Christopher Mercer and published by Wiley. This book was released on 2008-01-03 with total page 320 pages. Available in PDF, EPUB and Kindle. Book excerpt: Praise for Business Valuation, Second Edition "The Second Edition of Business Valuation: An Integrated Theory manages to present the theoretical analysis of valuation from the first edition and expand on that discussion by providing additional guidance on implementing the relevant valuation theories, notably in its expanded discussion of the Quantitative Marketability Discount Model." -Dr. David Tabak NERA Economic Consulting Your Essential Valuations Reference Whether you are an accountant, auditor, financial planner, or attorney, Business Valuation: An Integrated Theory, Second Edition enables you to understand and correctly apply fundamental valuation concepts. Thoroughly revised and expanded, the Second Edition demystifies modern valuation theory, bringing together various valuation concepts to reveal a comprehensive picture of business valuation. With the implementation of new accounting pronouncements mandating the recognition of numerous assets and liabilities at fair value, it has become critical for CPAs charged with auditing financial statements to understand valuation concepts. With thoughtful and balanced treatment of both theory and application, this essential guide reveals: * The "GRAPES of Value"-Growth, Risk and Reward, Alternative Investments, Present Value, Expectations, and Sanity * The relationship between the Gordon Model and the discounted cash flow model of valuation * The basis for commonly applied, but commonly misunderstood valuation premiums and discounts * A practical perspective on the analysis of potential business acquisitions Grounded in the real world of market participants, Business Valuation, Second Edition addresses your need to understand business valuation, providing a means of articulating valuation concepts to help you negotiate value-enhancing transactions. If you want to get back to valuation basics, this useful reference will become your guide to defining the various levels of value and developing a better understanding of business appraisal reports.

Download or read book Valuation written by Kenneth R. Ferris and published by FT Press. This book was released on 2002 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: In "Valuation: Avoiding the Winner's Curse," authors Kenneth R. Ferris and Barbara S. Pecherot Petitt will help you master both the science and the art of M&A valuation. Concise, realistic, and easy to use, it brings together the field's best "rules of thumb," compares every leading traditional and alternative approach, presents examples and case studies from many industries, and offers practical solutions for today's key accounting, reporting, and tax-related challenges.

Download or read book Integrating Imputed Interest on the Stock of Equity Provisions Into Business Valuation written by Manfred Frühwirth and published by . This book was released on 2006 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Damodaran on Valuation written by Aswath Damodaran and published by Wiley. This book was released on 1994-04-14 with total page 466 pages. Available in PDF, EPUB and Kindle. Book excerpt: Damondaran on Valuation will not only convince you of the vitality of the many valuation models available to you, it will help ensure that you develop the acumen needed to select the right model for any valuation scenario. Written by a gifted teacher and respected valuation authority, Damodaran on Valuation offers systematic examination of the three basic approaches to valuation - discounted cash-flow valuation, relative valuation, and contingent claim valuation - and the various models within these broad categories. Using numerous real-world examples involving both US and International firms, the book illuminates the purpose of each particular model, its advantages and limitatations, the step-by-step process involved in putting the model to work, and the kinds of firms to which it is best applied. Among the tools presented are designed to: * Estimate the cost of equity - including the capital asset pricing model and arbitrage pricing model * Estimate growth rates - with coverage of how to arrive at a weighted average of growth rates by blending three separate approaches * Value equity - focusing on the Gordon Growth Model and the two-and three-stage dividend discount model * Measure free cash flow to equity - cash flows that are carefully delineated from the dividends of most firms * Value firms - including free cash flow to firm models, which are especially suited to highly leveraged firms * Estimate the value of assets by looking at the pricing of comparable assets - with insight into the use and misuse of price/earning and price/book value ratios, and underutilized price-to-sales ratios * Measure the value of assets that share option characteristics - including a comparative look at the classic Black-Scholes and simpler binomial models. Supported by an optional IBM-compatible disk, which consists of spreadsheet programs designed to help users apply the models highlighted in the book, Damodaran on Valuation provides practitioners involved in securities analysis, portfolio management, M&A, and corporate finance with the knowledge they need to value any asset.

Download or read book Business Valuation and Taxes written by David Laro and published by Wiley. This book was released on 2005-04-22 with total page 576 pages. Available in PDF, EPUB and Kindle. Book excerpt: Disputes over valuation issues fill the court's dockets and for good reason, fair market valuations are required frequently by the law. The authors believe that approximately 243 sections of the Code and several thousand references in the Regulations explicitly require fair market value determination. Consequently, taxpayers file an estimated 15 million tax returns each year reporting an event involving a valuation related issue. It is no mystery, therefore, why valuation cases are ubiquitous. Today, valuation is an important and highly sophisticated process. Valuators need legitimate guidance to perform their work. The objective of this book is to provide knowledge, and guidance to those who do the valuations as well as those who are affected by them. This unprecedented text provides: Clear guidance and perspective on business valuation from two of the nation’s top authorities, Hon. David Laro and Dr Shannon Pratt. Insightful perspective and discussion on critical issues, procedures and law pertaining to business valuation. An overview of business valuation procedures Law and techniques of Fair Market Value Opinion from the Hon. David Laro and Dr. Shannon Pratt who express their unique and critical views. The business valuer with everything from the basics to the sophisticated. From definitions to valuing complex business interests, what you need to know about business valuation. Everything from empirical market evidence to credible expert business valuation testimony discussed and analyzed by the Hon. David Laro and Dr. Shannon Pratt.

Download or read book Business Valuation and Federal Taxes written by David Laro and published by John Wiley & Sons. This book was released on 2011-05-03 with total page 532 pages. Available in PDF, EPUB and Kindle. Book excerpt: Business Valuation and Federal Taxes Procedure, Law, and Perspective SECOND EDITION Combining the expert knowledge of Senior Judge David Laro and Shannon Pratt, Business Valuation and Federal Taxes, Second Edition presents the authors' decades of experience, with advice on everything practitioners need to know about the relationship between federal taxes and valuation, and specifically valuations relating to business interests. This reference features indepth examinations of numerous topics that are particularly important to practitioners and explores a broad understanding of the basic knowledge needed to appreciate business valuation. Valuators, CPAs consulting on valuations, attorneys, corporate development officers, and intermediaries on business valuation will benefit from insightful discussions on topics ranging from general definitions to valuing complex business interests, as well as new discussions of: Personal versus enterprise goodwill New materials on transfer pricing and customs valuations and how recent markets have affected both the income and market approaches Coverage of FAS 157 and the many changes to penalties and sanctions affecting both taxpayers and appraisers Several important new court cases Coverage is also included on standards of business valuation, IRS positions, burden of proof in valuation controversies, questions to ask business valuation experts, economic and industry analysis, and tax-affecting passthrough entities. Complete with a full overview of the laws, procedures, and approaches related to business valuation, this invaluable reference is a wellspring of vital information on valuation approaches, techniques, finance-related issues, burden of proof, standards, choice of entity, and much more.