Transcription of Valuation: Basics
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Example: tourism industry
Valuation: Basics
Aswath Damodaran!1! valuation : Basics !Aswath Damodaran Aswath Damodaran!2!Approaches to valuation ! Intrinsic valuation , relates the value of an asset to the present value of expected future cashflows on that asset. In its most common form, this takes the form of a discounted cash flow valuation . Relative valuation , estimates the value of an asset by looking at the pricing of 'comparable' assets relative to a common variable like earnings, cashflows, book value or sales. Contingent claim valuation , uses option pricing models to measure the value of assets that share option characteristics. Aswath Damodaran!3!I. Discounted Cash Flow valuation !
pricing of 'comparable' assets relative to a common variable like earnings, cashflows, book value or sales. ! ... The cost of equity for the firm, based upon a riskfree rate of 2%, the risk premium of 6% in 2010 and a beta of 1.00.! Cost of equity = 2% + 1.00 (6%) = 8.00%!
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