In this class, we completed the last pieces of the valuation puzzle, first looking at why we need a terminal value and then at the rest of the assumptions that go with being a mature firm. We used Vale as an example of a mature company and a cautionary note about what happens when you normalize by just averaging over time. I did mention that Vale was one of my biggest losers, and if you are interested, here is my “No Mas, No Mas” post on the company:
The bad news is that I lost a lot of money on that bet, but the good news is that the stock kept going down further, and I was able to buy it again at a much lower price. We also completed the terminal value for Disney and brought it into a final valuation. The bottom line is that corporate financial decisions ultimately drive the inputs to valuation.
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25test.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session25soln.pdf