Transcription of Some common mistakes - Deloitte
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Some common mistakes - Deloitte
Some common mistakes to avoid in estimating and applying discount ratesDeloitte | A Middle East Point of View | Spring 2014| 37 Discount ratesOne of the most critical issues for an investor toconsider in a strategic acquisition is to estimate howmuch the company being acquired is worth. On theback of the 2008 financial crisis, a valuation is beinglooked at not just as a static value at a point in time,but more as a basis for developing a post-acquisitionoperation plan to drive value accretion andminimizing risk. As such, the Discounted CashFlow (DCF) analysis is being more frequently usedto value companies. Ke = Rf + (RPm + RPi)
Inflation differential based on the Economist Intelligence Unit long-term forecast 2. Beta and debt/equity based on Morningstar industry beta for educational services sector 3. Market risk premium based on historical implied risk premium on U.S. equity market 4. Country risk premium sourced from Prof. Damodaran’s research based on sovereign ...
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