Chapter Eight - The Highlights
  • study three different valuation approaches - a standard WACC approach, a Flows To Equity (FTE) approach and the Adjusted Present Value (APV) approach;
  • reconcile the results from all three approaches;
  • show why the standard WACC approach works best when gearing is constant, and is less sensible when gearing varies;
  • sets out the different WACC approaches that need to be used when the constant gearing assumption is relaxed;
  • provides information about the different beta unlevering formula associated with these approaches; and
  • reconciles these different WACC approaches with APV.
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