Valuation of business, Finance Basics

Valuation of Business

A business may be valued for different type of reasons that as for merger, acquisition, or takeover or liquidation or outright sale.  During purchasing a business, a buyer will be interested in not just the assets also for the future income this business is expected to create.

Theoretical value - within theory, if a purchaser buys a business, he is only buying a stream of future income flows and to arrive on the real purchase price the buyer will:

a) Consider the estimated probable cash flows.

b) Discount cash flows to their current value.

c) Add together the split amounts to provide the present value of income stream.  Whereas future income flows are constant:

    PV= C (1-(1+r)-n/r)                                  

Where like: PV     = Present value of income stream

                   c        = Inflow per annum

                   r       = Discounting rate

                   n      = Number of years the inflows will last

Posted Date: 1/31/2013 1:36:36 AM | Location : United States







Related Discussions:- Valuation of business, Assignment Help, Ask Question on Valuation of business, Get Answer, Expert's Help, Valuation of business Discussions

Write discussion on Valuation of business
Your posts are moderated
Related Questions
Assume a levered firm has a current value of $650,000,000. The firm currently has $259,258,527.20 in debt. Without debt, firm value (i.e. VU) would be $580,000,000. Ignore the cost

Do you guys provide Cost of Debentures assignment help. I need writing a report on Cost of Debentures and it is about 2000 words. Let me know. I need to buy your solution.

the two problems below (P1 and P2). Five marks each. Part marks will be allocated, but if you have the incorrect answer then you cannot expect to get more than half marks. Project

Inventory Management - Supply Chain Management Determination of the best ordering policy in a manufacturing organisation In a manufacturing organisation, procurement may ha

The Audiology Department at Randall Clinic offers many services to the clinic''s patients. The three most common , along with cost and utilization data, are as follows: Service Var

Baumol's Model - Optimal Cash Balance An application of the EOQ is the Baumol's model which is inventory model to cash management. Its statements are as: The firm emplo

A company that manufactures electrical appliances is looking at one of its lines (washing machines), where it offers three different levels of specification: Basic which sells for

Requirements for Raising Loan Requirements for Raising Loan are as follow: a) Subsidiaries of the company and History. b) Qualifications, ages, and names of the company's dire

what do you consider to be the main inbound logistics for banking

should be provied on a centralised or a decentralised basic?