Share valuation as per dfcf method

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Akash Agarwal (Querist)
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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..

VIVEK SHARMA

VIVEK SHARMA (Expert)
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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

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