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Module 7:valuation using residual enterprise income Catalog & Mail order houses industry

Module 7:valuation using residual enterprise income Catalog & Mail order houses industry Matt Lynch. Presentation Outline. Brief Overview of Company & Industry Problem with DCF vs. REI Discounted Cash Flow Valuation Residual Enterprise Income Valuation. Industry Definition.

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Module 7:valuation using residual enterprise income Catalog & Mail order houses industry

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  1. Module 7:valuation using residual enterprise income Catalog & Mail order houses industry Matt Lynch

  2. Presentation Outline Brief Overview of Company & Industry Problem with DCF vs. REI Discounted Cash Flow Valuation Residual Enterprise Income Valuation

  3. Industry Definition Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio Products and services are delivered through the mail Companies in this industry typically have low amounts of inventory and commonly act as the “middle-man” in sales transactions Source: business.highbeam.com

  4. eBay • Transaction based business model • Marketplace • eBay.com • StubHub.com and other small websites • Payments • PayPal • Bill Me Later • Marketing, Classifieds, Advertising Services • eBay Enterprises

  5. Valuing eBay Estimate of enterprise cost of capital: 10.1% Estimated growth rate beyond 2018: 7%

  6. Attempt 1: DCF

  7. Attempt 1: REI

  8. Attempt 2: DCF

  9. Attempt 2: REI

  10. Valuing eBay Estimate of enterprise cost of capital: 10.1% Estimated growth rate beyond 2018: 5.5%

  11. Discounted Cash Flow Model Market Cap 71,400 NFA (9,552) Enterprise Value 61,848

  12. Residual Enterprise Income Market Cap 71,400 NFA (9,552) Enterprise Value 61,848

  13. Questions?

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