In this note we analyze the tutorial based on the McKinsey methodology for valuing companies. We have found that the McKinsey methodology has one of the most common mistakes mentioned in Tham and Veacute;lez-Pareja (2004a and b): valuing cash flows with a constant cost of capital when the...

In order to value a firm or a project, it is necessary to construct estimated financial statements and free cash flows. In this teaching note we will present a spreadsheet model - EXCELcopy; - for forecasting financial statements in a consistent way and without using what is known as plugs. The...

Financial textbooks offer multiple options to value a firm. However, few of them show the practical aspects related to negotiating a firm (selling or buying a firm).In this note we present some suggestions to be taken into account when selling or buying a firm. At the same time we present a...

This is a summary of the basic ideas on valuation depicted as a conceptual map. Under the assumption that Capital Asset Pricing Model, CAPM, works and that the discount rate for the tax savings is Ku, I show the sequence of calculations and interactions among the variables, beta, values, cash...

This is a summary of the basic ideas on valuation depicted as a conceptual map. Under the assumption that Capital Asset Pricing Model, CAPM, works and that the discount rate for the tax savings is Ku, I show the sequence of calculations and interactions among the variables, beta, values, cash...

This is a course material for an introductory course in Probability and Statistics for Engineering and Management. It is part of some course notes for my courses in Spanish on that subject. The draft of the book is Apuntes de Probabilidad y Estadiacute;stica para Ingenieriacute;a y...

This is a course material for an introductory course in Probability and Statistics for Engineering and Management. It is part of some course notes for my courses in Spanish on that subject. The draft of the book is Apuntes de Probabilidad y Estadiacute;stica para Ingenieriacute;a y...

This is a course material for an introductory course in Probability and Statistics for Engineering and Management. It is part of some course notes for my courses in Spanish on that subject. The draft of the book is Apuntes de Probabilidad y Estadiacute;stica para Ingenieriacute;a y...

In this teaching note we show how to use sensitivity analysis to consider uncertainty in the valuation of cash flows. We illustrate in a very simple way the use of the traditional identical percent change in the variables and an approximate approach that considers the probability of occurrence...

Using the model proposed by Velez-Pareja (2006) and assuming straight line depreciation we examine the conditions to assure a constant growth rate in a growing perpetuity. Our findings are that in practical terms for a growing perpetuity there are two options: either depreciation life is one...