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Module 8-Abnormal Enterprise Income

Module 8-Abnormal Enterprise Income. Drew Williams. Reminder—Who is Technip. Abnormal Enterprise Income. C umulative-FCF income. normal income. Anchors on EPAT Similar to Residual Income Model (different anchor) Number is capitalized. Other Models. DCF Totally based on FCF model

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Module 8-Abnormal Enterprise Income

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  1. Module 8-Abnormal Enterprise Income Drew Williams

  2. Reminder—Who is Technip

  3. Abnormal Enterprise Income Cumulative-FCF income normal income Anchors on EPAT Similar to Residual Income Model (different anchor) Number is capitalized

  4. Other Models • DCF • Totally based on FCF model • Captures least amount of value in first 5 years • Residual Income • Anchors on NEA • Similar to AEI • Captures more value than DCF, but less than AEI in the first 5 years

  5. DCF Valuation

  6. Residual Income Model

  7. Abnormal Enterprise Income Growth

  8. Issues Which WACC to use 10.44% or 11.59% Growth rate declines too fast? EATO may be too high going forward

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