CHAPTER 5 Fixed assets and depreciation. Contents. Introduction Section 1 - General principles of asset valuation Section 2 – Specific asset valuation problems. Contents (cont.). General principles of asset valuation Expensing assets Straight-line depreciation Diminishing balance methodBy MikeCarlo
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Asset Valuation. P.V. Viswanath Based on Damodaran’s Corporate Finance. Discounted Cashflow Valuation. where, n = life of the asset CF t = cashflow in period t r = discount rate reflecting the riskiness of the estimated cashflows. Two Measures of Discount Rates.
Asset Valuation. Inventories (HKSSAP 22) Valuation of Stock. Introduction. Hong Kong statement of Standard accounting Practice (2.122) – Inventories (i.e. Stock) is to prescribe the accounting treatment for inventories. Inventories. Inventories are assets:
Equity Asset valuation. Kevin C.H. Chiang. Free cash flow valuation. EAV, Chapter 4. Intrinsic value. A major task of fundamental analysis is about finding the present values of future expected (deterministic) cash flow streams.
Depreciation & Asset Valuation. 1.21.10. Depreciation. What is it? “Annual loss in value due to use, wear, tear, age, & technical obsolescence.” Business expense reducing annual profit Factor that determines value for depreciable assets
Stock Valuation Problems. If you expect the dividend in one year to be $ 2.25 and you expect it to grow at a constant rate each year of 5%, what do you believe the stock is worth assuming your RoR on the stock is 15.5?.
Bond Valuation Problems. 3. Interpreting Bond Yields Suppose you buy a 9 percent coupon, 15-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, what happens to the value of your bond? Why? Answer: $649.16. Bond Valuation Problems.
Stroke-Specific Problems. Addendum slides. Weakness. There was a time when spasticity/hypertonia was treated as a primary obstacle to motor function after stroke. Current evidence, however, suggests that weakness may be directly responsible for impaired motor function. Weakness includes