andrew i think your interpretations skills need some brushing up to do. you have understood each of my questions in the most incorrect manner possible. but never mind. maybe it was my writing inadequacy.
this was the email he sent me
Hi Charu.
Thanks for sounding out to us. We were beginning to wonder where you guys went…
“anyways param and I have worked on our parts and have progressed substantially.”
That’s great news! Then please reply and state what exactly you have done, and which component of the corp project it belongs to.. (E.g. FCFF valuation – Fundamental Valuation, or consolidation – adjustments to financial statements.) Take what u have done and send it along with your reply as attachments, its ok if it is in draft form or halfway done. This is so that we can sitrep and assess where we are now. Do this now please, time is running short. if there are parts assigned to you that you have not started on, please state so.
Answers to your qns:
- It depends, there is no fixed ans. By right it should be a weighted average of all the companies in the industry, but as that can lead to distortions, sometimes people use normal average instead. In any case, it doesn’t matter, you should be able to find it. Remember that Prof say we can take figures from Thompson banker /Bloomberg/ whatever. Kelvin and Joel, if u know, please assist.
- Please provide more background information. How did you get your figures? What is the discrepancy? Is the discrepancy significant? Does it matter (for the purposes of corp rep proj)? For which part of the project are you using these figures? Ratios? Which ratios?
- This question is very worrying.
- This question is exceedingly worrying. Please don’t take this personally, Charu, it really is nothing personal. But I am very shocked and disturbed at your questions; I don’t think I will be able to sleep tonight. This part has been assigned to you from the very beginning, since the first meeting. You question shows that you totally do not understand, in any capacity, how to do FCFF. That, in itself, is totally fine. What shocks me is that you have waited till less than a week away from submission deadline to sound out. Remember that this component of the proj is a REQUIREMENT. Remember also that you were assigned only this component and parts of relative valuation; already it is a very light workload. If you didn’t know how to do it, shouldn’t you have said so earlier? Ask yourself whether you are being fair to the rest of your groupmates. In my opinion, FCFF (or any of the fundamental valuation models in fact) is probably the easiest part of the entire corp rep project. With the figures from kelvin’s valuation, it should not take anyone more than a couple of hours tops.
The Summation is because u have to sum up each year after u discount them. Summation is used because the denominator increases in power each year (you discount further by one year).
Param - I thought we had agreed that I would take over fundamental Valuation?
Charu – Do not worry about Fundamental Valuation any longer, we will settle it.
