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By: Se Kim

By: Se Kim. By: Se Kim Module 8: Abnormal Income Growth Valuation Model March 16, 2014. Calculating Cost of Equity Capital. Return on market: 9.0% Risk-free rate: 3.69% Cost of debt capital: 3.01%. Cost of Enterprise Capital. Considerations.

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By: Se Kim

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  1. By: Se Kim By: Se Kim Module 8: Abnormal Income Growth Valuation Model March 16, 2014

  2. Calculating Cost of Equity Capital • Return on market: 9.0% • Risk-free rate: 3.69% • Cost of debt capital: 3.01%

  3. Cost of Enterprise Capital

  4. Considerations • Anticipated accounting information -> value enterprise operations • Abnormal Income Growth is equal to change in residual enterprise income

  5. Walmart FCF Valuation

  6. Walmart Residual Income Valuation

  7. Abnormal Income Growth Model

  8. Conclusions • REI Valuation – Enterprise value: • $738,918,699 • FCF Valuation – Enterprise value: • $738,918,699 • Abnormal Income Growth Model – Enterprise Value: • $707,191,173

  9. Questions??

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