Case Studies (Laura Martin) Research Paper Example | Topics and Well Written Essays - 1000 words

Case Studies (Laura Martin) - Research Paper ExampleIn the DCF analysis, the Net fork up value has been calculated as the present value of the future net dislodge cash inflows or the tax income of the business, minus the expenses, or the present value of the costs incurred (Mauboussin, 5). In most cases, these two argon discounted using the companys WACC (Stearns, 29).This assumption though made by Laura Martin is a flawed assumption. Mainly, free cash flows depend on the demand in the commercialise, prices in the market, and other external factors in the market, with the market compensating firms beca role of taking marketing risks (Chan et al, 3). In most cases, costs should be discounted at a rate high than the risk free rate (Stearns, 3). This means that discounting the cash flows and the costs at similar rates will significantly reduce the costs such actions would lead to overhaul of the firm (Chen et al, 3). Martin in these calculations used the of import approach, which measures the co-movements of firmss equity prices of 1.07 in forecasting 10 years of cash flows in the market and which is abnormal by so many market variables (Mauboussin, 16). However, equity prices are unstable and change each cartridge clip depending market business conditions.The multiple analyses assumed that the firm would realize the stated future sales revenue at the end of the forecast period (Chen et al, 3). Firms that have comparable acquisitions, particular in the same diligence are used as a base in finding an appropriate range of multiples to use (Stearns, 24). Though multiples are very plausible, they have a problem in that there is no adventure of having a company that is comparable to Cox as firms do use various valuation approaches..The stealth- form can be incorporated into the DCF and the multiples analysis. The unused cable capacity of Cox communications can be included into the discounted cash flow analysis, through