Share valuation as per dfcf method
This query is : Resolved
Akash Agarwal
(Querist)
06 April 2012
I need to issue a CA certificate regarding valuation of shares..
Its a Private ltd. Co. which want to issue shares to a foreign investor..
I need to value the share as per DFCF method.. plz tell me how can i calculate Cost of Equity & Cash flows which is to be considered for Discounting..
Its a Private ltd. Co. which want to issue shares to a foreign investor..
I need to value the share as per DFCF method.. plz tell me how can i calculate Cost of Equity & Cash flows which is to be considered for Discounting..
VIVEK SHARMA
(Expert)
06 April 2012
I think you are referring to DCF method. If it is DCF method, cost of equity can be found using CAPM model. To get beta (Since it is a private company), you can use beta of similar companies which are listed.
Use the following formula to get cash flow:
Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
Use the following formula to get cash flow:
Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment
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