Determinants of Intrinsic Value:The Weighted Average Cost of CapitalValue =++···+FCF1FCF2FCF∞(1 + WACC)1(1 + WACC)∞(1 + WACC)2Free cash flow(FCF)Market interest ratesFirm’s business riskMarket risk aversionFirm’s debt/equity mixCost of debtCost of equityWeighted averagecost of capital(WACC)Net operatingprofit after taxesRequired investmentsin operating capital−=Preview Mode
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