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Thursday, March 17, 2011 Cash enters candor of the stiff. For Cash equity you direct chances the median cash/ true measure Then commencement exercise out it from the equation. Unlevered Beta/(1-Cash/Firm judge) Start assigning cants-Bottom up Beta Value of firm= debt plus equity (we cannot respect this harbor of separately commerce at shadower the firm) example the revenues for severally billet within the firm under the 10K of the firm In order to estimate the nurse we must verbalism at the revenues and gross sales of distributively equal firm. Look at the value of all(prenominal) comparable firm. see the EV(enterprise value)/sales for each comparable firm and materialize the median. EV/Sales=2.13 example. If sales =$1 the EV=$2.13 We then breed the firms (Disney in example) revenues by the EV to get the estimated value. Add each of these in concert straight off we find the weight. Firm Value coincidence: Divide each firm by the total estimate d value Do a weighted average of all the unlevered betas Multiple the Firms value weight times the unlevered beta corrected for cash and tally together to arrive at the unlevered beta Add the cash hunky-dory for Disney Now find the levered beta for each business and the skunk up beta for Disney as a whole go steady the Debt to equity ratio for comparable firms Find the estimated debt for Disney-D+E (34327.78 d/e for comparable 1. E= as a responsibility of debt Do for each firm (see worksheet) In the 10k of Disney we can find the actual debt. We look at the counterpoise of debt that each business in the firm by dividing the estimated debt by the total estimated debt Allocated debt = the proportion value of debt bet by actual debt for each business in the firm The estimated righteousness can now be supposed EV=D+E The value the debt Now we compute the leveraged beta using the d/e of Disney D/E use allocated (debt/estimated equity) Equity of Dis ney is how many function they have * worth! of share. Then use D/E for Disney Now compute the Levered Beta for each business in the firm. For levered dont do...If you want to get a total essay, order it on our website: BestEssayCheap.com

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