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Valemail

 


The emails for this class will be collected on this page, arranged chronologically. Since I send quite a few, you can target it on a specific month by going here:

Have fun with them!

Date
Email content
1/11/19
I am sure that you are finding that break is passing by way too fast, but the semester is almost upon us and I want to welcome you to the Valuation class. One of the best things about teaching this class is that valuation is always timely (and always fun...) Just as examples: Is it time to buy or sell Twitter? Is Uber worth $120 billion? Is there a market bubble? What is the value added or destroyed by the Kardashians? Are the Dallas Cowboys really worth more than the New York Yankees? Is there a Trump effect on markets and if so what is it? If you have not visited my blog, I put my thoughts down on these issues (though I am still working on the Kardashian valuation): 
http://aswathdamodaran.blogspot.com/ 

1. Preclass work: I  know that some of you are worried about the class but relax! If you can add, subtract, divide and multiply, you are pretty much home free... If you want to get a jump on the class, you can go to the class web page:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/equityUG.html 

2. Syllabus & Calendar: The syllabus for the class is available on the website for the class and there is a google calendar for the class that you can get to by clicking on

https://bit.ly/2DrzZFl    

 For those of you already setting up your calendars, it lists when the quizzes will be held and when projects come due. 

3. Lecture notes: The first set of lecture notes for the class should be available in the bookstore by the start of next week. If you want to save some money, they can also be printed off online (if you want to save some paper, you can print two slides per page and double sided). To get to the lecture notes, you can try
http://www.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqUGspr19.htm
Please download and print only the first packet on discounted cashflow valuation. If you want to save paper, you can download the pdf file on you iPad, Android or Kindle and follow along... 

4. Delivery choices: I hope to see you all in class for every session, but there are two supporting delivery mechanisms that I would like you to take advantage of:
a. iTunes U: I will also be posting the material for the class on iTunes U. If you have never used iTunes U, you need an Apple device (iPad or iPhone) and have to download the iTunes U app (free). Then use the enroll code: FAC-LTX-JJH
Alternatively,  type in or click on the link for the class.
I really like the set up and I think you may enjoy it too. If you have an android, it is a little more involved, but try downloading Tunesviewer, an Android app that lets you use iTunes U.
b. YouTube Channel: There is a final option, if your broadband connection is not that great and you are watching on a Tablet/smartphone. There is a YouTube playlist for this class, where all class sessions will be loaded.
When you get a chance, check it out.

5. Books for the class: The best book for the class is the Investment Valuation book - the third edition. (If you already have the second edition, don't waste your money. It should work...) You can get it at Amazon or wait and get it at the book store... If you are the law-abiding type, you can buy "Damodaran on Valuation" - make sure that you are getting the second edition. If you can get the Asian edition, even better. It is exactly the same book and costs about a third. Or, as a third choice, you can try The Dark Side of Valuation, again the second edition, if you are interested in hard to value companies.. Or if you are budget and time constrained, try "The Little Book of Valuation". Finally, if you really want to take a leap, try my newest book, Narrative and Numbers at 
https://www.amazon.com/Narrative-Numbers-Business-Columbia-Publishing/dp/0231180489 
You will find the webpages for all of the books at http://www.stern.nyu.edu/~adamodar/New_Home_Page/public.htm. If you want a comparison of the books, try this link: http://people.stern.nyu.edu/adamodar/New_Home_Page/valbookcomp.html 

6. Valuation apps: One final note. I worked with Anant Sundaram (at Dartmouth) isn developing a valuation app for the iPad or iPhone that you can download on the iTunes store: http://itunes.apple.com/us/app/uvalue/id440046276?mt=8 
It comes with a money back guarantee...  Sorry, no Android version yet…  
I am looking forward to seeing you in a couple of weeks. Until next time!
1/21/19
One of the themes of this class will be that while your valuation looks like a collection of numbers, the story that holds these numbers together is the glue. Consequently, to get a handle on valuation, you have to learn to navigate that space between stories and numbers and your skills have to be broad. I know that you are still on break and that the last thing you want to do is reading, but if you do get a chance, please read this post that I have on my blog:
http://aswathdamodaran.blogspot.com/2016/08/investing-and-valuation-lessons-from.html 
The post was triggered by the awe I felt, looking up at Brunelleschi’s Duomo in Firenze this summer, but the thoughts are all investing/valuation thoughts. In fact, I jwrote a book on connecting stories to numbers and here is the post introducing the book (which became available about a year and a half ago).
http://aswathdamodaran.blogspot.in/2017/01/narrative-and-numbers-how-number.html 

If you did get a chance to read my long email last week (and I would not blame you if you skipped it), you probably noticed that the link that I had for the page with the lecture notes and class webcast did not work. Here is the right link:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqUGspr19.htm

Also, if you missed the first email, the email chronicles will record them for posterity and you can find them by going to this link:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/eqUGemail.html 

I also want to end this email on a personal note, because it will have an effect on you, at least over the first two weeks. My wife will be going in for her surgery on January 29, which as you can see is right between the first two sessions of this class. Since the surgery will be in San Diego, I will not be physically able to get to New York for the classes on January 28 & 30 (and perhaps even February 4), but I will still teach them, through the miracles of modern technology. So, for the moment, please come to class next Monday and I will be there, or at least my online presence will.  In 34 years of teaching, I have never missed a class, and I am truly sorry to miss my first sessions with you. I will make it up with added enthusiasm in the remaining sessions. Until next time!
1/28/19 Hi folks,
The first session of the class is fast approaching and I hope to see you in Paulson at 3.30 pm today.  As I mentioned in my last email, I will be teaching this session virtually from California, but thank God for technology! Aditya Hemrajani is the TF for the class and he will be bringing down three handouts to pick up: the syllabus for the class, a project description and the slides for sessions 2-3. They will be placed on the desk in front of the room. Please pick up copies. If you prefer digital versions of the handouts, they are below:
  1. Syllabus: http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/eqUGsyllspr19.pdf 
  2. Project Description: http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/eqprojspr19.pdf 
  3. Introduction to Valuation (Sessions 1-2): 

The lecture notes past session 3 are available in three packets and you have two choices on these packets. You can download the lecture note packets by going to this link:
http://people.stern.nyu.edu/adamodar/New_Home_Page/webcasteqUGspr19.htm
While you are on this page, if you scan down, you will notice that the webcasts for the class will go up on this page, just in case…

You can either print off the slides or save the rain forests and keep them on your device and bring them to class. For those of you who prefer to make the bookstore rich, the first lecture note packet should be available at the bookstore, though given how slowly the process runs, they may not have it until Wednesday. Finally, this is the third email that I have sent out to the class, and if you have no idea what was in the first two, try this link:
http://people.stern.nyu.edu/adamodar/New_Home_Page/eqUGemail.html 
I will talk to you soon! Until next time!
1/28/19
We are officially rolling. If you enrolled in the class in the last couple of days, you did miss the first three emails but they are already in the email chronicle, in case you are interested:
Email chronicles: http://people.stern.nyu.edu/adamodar/New_Home_Page/eqUGemail.html
This chronicle will be updated at the end of each week to include all emails sent up until then. There were three handouts in class today and you can find the links in the email I sent out earlier today. One quick correction to the syllabus is that the final exam is scheduled for May 17 from 3-4.50 pm (not May 15).

 A quick note about today's class. First, it was a virtual class, since I am physically not in New York. During the session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I suggested that you start thinking about forming a group and picking companies. To get the process rolling, here is what I have done
  1. Group: Please do find a group to nurture your valuation creativity, and a company to value soon. 
  2. Company Choice: Once you pick a company, collect information on the company. I would start off on the company's own website and download the annual report for the most recent year (probably 2017) and then visit the SEC website (http://www.sec.gov) (for US listings) and download 10Q filings. (You can pick any publicly traded company anywhere in the world to value. The non-US company that you value can have ADRs (but does not have to have ADRs) listed in the US but you still have to value it in the local currency and local market. You can even analyze a private company, if you can take responsibility for collecting the information.)
  3. Webcast of today’s class: The web cast for the first class are up and running (or at least the streaming version). You can access it by going to: http://people.stern.nyu.edu/adamodar/New_Home_Page/webcasteqUGspr19.htm. The links to iTunes U and YouTube will also be up shortly.
  4. Lecture Note Packets: You can wait for the bookstore to get its act together and get the packets ready or you can get a jump by downloading the lecture note packet online. It is available at the top of the webcast page (see link above) in either pdf or ppt format. 
  5. Post class test: To review what we did in class today, I prepared a very simple post-class test. I have attached it, with the solution. Give it your best shot.
Until next time!

Attachments: Post-class test and solution.

1/29/19 Hi,
1. Valuation of the week: If you are going to do a valuation of Star Wars, I think it makes complete sense to start with Yoda talk.  So, for your first valuation of the week, let’s have some fun. I have always been a Star Wars fan, and like other fans, I was a little worried when Disney bought Lucas Films (and with it the rights to the Star Wars franchise) for $4 billion a few years ago. Disney was explicit about its plans at the time, and said that it planned to produce three major Star Wars movies, continuing the story, and three side stories (like Rogue One) filling in history. I went to see Force One in December 2015 and wrote this post on my blog about what I thought the value of Star Wars was at the time;
I assigned a value of almost $10 billion to the franchise, with a big chunk coming from the side products (toys, software, apps) coming from the franchise. You can download the spreadsheet that contains the valuation here:
When I wrote the post, Force Awakens had been out in theaters only a few days and I estimated box office revenue of $2 billion for the movie. Rogue One, of course, had not been released yet and I estimated revenues of $1 billion. Force Awakens is now one for the history books, with global revenues of just over $2 billion and Rogue One just crossed the $1 billion threshold.
Updated box office for Force Awakens: http://www.boxofficemojo.com/movies/?id=starwars7.htm 
In addition, the eighth Star Wars movie has come and gone, with the Last Jedi, as has the next add on movie on Hans Solo:
Armed with this additional information, here is what I would like you to do. Go into the spreadsheet and reestimate the value of the Star Wars franchise. It may be only tweaks but give it your best shot. Once you have a value, go into this shared Google spreadsheet:
Enter your numbers and lets see how the distribution of values evolves over time. And since this is a Star Wars post, might as well end with some good advice:

Have fun, you must!

2. Calendar and Syllabus: I have been told by Aditya that some of you have landed on the wrong calendar and launching page for the class and ended up confused about dates. To clarify, I am teaching two valuation classes, one to the MBAs and one to you, and I have different entry points and calendars. Here are the ones that matter for you:

3. Start of the class and class-end rituals: We will start every session with a start of the class test, previewing the material for the session but with no grades/pressure and we will end every class with a post-class test, with a solution, against not graded. You saw the first of the latter yesterday, in the email I sent after the class. You will see the first of the start of the class tests tomorrow and just to give you a heads-up, I have attached it to this email as well. You don’t need to understand valuation to answer this. Just use common sense!

Attachment: Start of the class test for session 2

1/30/19 First, on the personal front, my wife’s surgery went well yesterday and we are relieved. That said, two and a half hours of surgery can do a number on you and she is still woozy and in pain, and I don’t think that I will leave her side today. That said, I prepared for this, and I recorded the whole class ahead of time. I will send you the links to the video in a  few hours, but you don’t have to come to Paulson to watch it. I know that you will miss the cozy charm and ambience of that room (I am just kidding!) but you can watch this session at home, in your pajamas, instead of watching The Good Life on ABC or Dr. Pimple Popper on TLC (two of my favorite shows). By Monday, I hope to be in New York and no more virtual classes! Until next time!
1/30/19
I hope that you got my email this morning about not coming to class, especially since it is really cold, and I am truly sorry again, if you feel that you are not getting your money’s worth by not having a physical class. You can find today’s session on the webcast page for the class, but the direct link to the YouTube video is here. 
https://youtu.be/m4IUH0Nd4No 
It is a gripping, bone-chilling, seventy two minutes of non-stop excitement. (Hey, someone has to talk it up… ) Seriously, though, please drink a couple of coffees and watch it when you get a chance.

As always, the video will also be on the iTunes U version of the class in a couple of hours, and I will try to get in onto NYU Classes by later today. This class, which is built around the slides titled Introduction to valuation ( http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/Valintrospr19.pdf)  started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online on the webcast page for the class. We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements:  a long time horizon and the capacity to act as the catalyst for market correction. We will be starting on the first lecture note packet on Monday. So, please print off the packet ( http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valpacket1spr19.pdf)  or buy it at the bookstore (if it is available) and bring it to class with you.

Attachments: Post-class test and solution.
1/31/19
I hope that you have had a chance to watch yesterday’s class. I notice that while more than 1100 people have watched the video, the average watching time is only 11 minutes, which though high by YouTube standards, is about an hour short of the entire session. I know that you can speed up the audio to make it faster, but if you make it too fast, I will sound like Alvin and the Chipmunks. Just in case you have no idea what I am talking about, here is the YouTube video link:
https://youtu.be/m4IUH0Nd4No

On a different note, this is the first project-related email that you will be getting. Remember that every Thursday is project email day, and in this one, I want to make sure that you
  1. Find a group: The groups are yours to create and you should try to have at least 4 people in a group and not more than 8 (that limit is for your own projection).  If you are being ostracized and no one wants you, I would suggest some therapist time in the near future, but for the moment, you can add your name to what I will call the orphan list for the class: https://docs.google.com/spreadsheets/d/1gjlvbVj7YgzAqOZY5SODBnUNVLx88k5BVrWyFUCQbn8/edit?usp=sharing 
  2. Pick a company: This will require some coordination across the group to make sure that you meet the minimum criteria (at least one money loser, high growth, emerging market, service company). In making this choice, remember that you can value any business you want, public or private, small or large, listed in any market. There are at least a couple of entrepreneurs in the class who are valuing their own businesses and  quite a few valuing privately owned family businesses. 
  3. Annual Report: Find the most recent annual report for your company. If you are valuing a private business, just ask for income statements and balance sheets for as long as you can get them (I will assume that you know the owner or better still, you are the owner).
  4. Public filings: If your company has quarterly reports or filings pull them up as well. 
In doing all of this, you will need data and Stern subscribes to one of the two industry standards: S&P Capital IQ (the other is Factset). It is truly a remarkable dataset with hundreds of items on tens of thousands of public companies listed globally, including corporate governance measures. I am working on getting you okayed to use this dataset and I will let you know when it is accessible. Until next time!
2/1/19
Three quick notes. 
1. Valuation Tools Webcast #1: The first is that I did put up the first valuation tools webcast on the basics of data collection. I know that many of you still pondering your company choices and group dynamics, but if and when you pick a company, the first step is to get the raw material you need for your valuation. These include data on the company (annual reports, regulatory filings like the 10K/10Q), sector wide data (numbers for other companies in your sector) and macro economic data. I know that many of you already know exactly how to do this. However, if you feel uncertain, you can try this webcast out.
It is about 15 minutes long & not very professionally produced. So, ignore the bad light and bobbing head and focus on the content!

2.The TA for the class is Aditya Hemrajani and his email is agh312@stern.nyu.edu. Please don’t inundate him with questions, since many of them are better directed at me. My office is always open, if I am in. So, use the fair game principle to your advantage. I will be New York from Monday through Wednesdays only this month, since I am needed back at home (in California). Even when I am away, though, I can always be reached on email and I am pretty good about responding quickly. 

3. As should have been obvious, this is a big class with close to 330 people in it. That makes it a great venue for announcements that you may want to make about club activities or events. I will open each class session by allowing one announcement. If you want to make an announcement, please sign up for it as well in the Google shared sheet below:
Until next time!
2/2/19

I hope that you are enjoying your first weekend back at school. I will intrude with a few notes. First, my wife is doing better and it looks like I should be in class on Monday. I can’t wait!  Second, the first newsletter for the class is attached. As I said, there is usually not much news in these newsletters. Think of it more as a GPS for the class, telling you where we went last week and laying out our plans for the week ahead. If you get a chance, take a look at it. Third, we will be starting with the first lecture note packet in class on Monday. Please have it with you for class. Have a great weekend! Until next time!

Attachments: Issue 1 (February 2)

2/4/19
Today's class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
http://aswathdamodaran.blogspot.com/2014/03/if-it-is-strategic-growth-investment-in.html
After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the process for estimating the cost of equity in a valuation. In particular, we broke down risks into different types and argued that only some of these risks belong in discount rates, if investors are diversified. Next session, we will start with a discussion of risk free rate, a foundational number that will drive the rest of our calculations. I have attached a post class test for today, with the solution, but I think that four of the questions relate to risk free rates, which we have not covered yet. So, if you want to wait until Wednesday’s class, you might have an easier time. Until next time!

Attachments: Post-class test and solution.
2/5/19
It is Tuesday, and it is time for the valuation of the week. I decided to revisit one of my favorite companies, Apple, and value it. Since it is a company I have valued before and my most recent valuation was only in September, the best place to start is with two blog posts that I wrote about my valuation of Apple (with Amazon thrown in for good measure):
Post 1 (from September 2018): http://aswathdamodaran.blogspot.com/2018/09/apple-and-amazon-at-trillion-looking.html 
Post 2 (from September 2018): http://aswathdamodaran.blogspot.com/2018/09/amazon-and-apple-at-trillion-follow-up.html 
I got incredibly lucky in terms of timing, since my value was about $200 and the stock was at $230. The stock dropped as low $145 early this year, right after a China surprise, and it came out with both an annual and a quarterly report after my 2018 valuation:
10 K from November 2018: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/68027c6d-356d-46a4-a524-65d8ec05a1da.pdf
10Q from February 2019: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/8f91c57f-9dbf-48c4-889c-792e2acc05d4.pdf 
I revisited my valuation, with updated inputs not just for Apple but for risk free rates and risk premiums. My valuation of Apple in February 2019 is at this link:

My value for Apple is $183, and the stock is trading at $ 174. I am not trying to sell you on my conclusions. What I would like you to do is to take my valuation (and story) and make it yours, by entering the spreadsheet and changing the numbers. To keep you focused, here are the four numbers that drive the value:
  1. Revenue growth: My assumption is that the China shock notwithstanding, the expected growth rate in revenues will be about 3% a year, with services picking up some of the lag. You might disagree).
  2. Operating margin: Apple’s operating margin is about 28.6%, down from 30% a couple of years ago. I think it will continue to drift down as the smart phone business continues to become more competitive and my target margin is 25%, reached in 5 years. Again, you might disagree.
  3. Sales to Capital: I know that this sounds mysterious but I use it to determine how much Apple will have to reinvest to get its growth. It is not a big deal since I am not assuming much growth. I am using the US industry average for electronics companies of 1.81 to estimate reinvestment. If you think that I am reinvesting too much, raise this number. If you think I am reinvesting too little, lower this number.
  4. Cost of capital My cost of capital for Apple is 9.45% and if you go into the cost of capital worksheet in the valuation, you will see what I am assuming. This is higher than the median cost of capital for a US or global company, and puts them in about the 65% percentile in terms of risk. You are welcome to disagree.
Once you have made your changes and come up with a value, please enter your inputs and resulting value into a Google shared spreadsheet. Please don’t wreak havoc by deleting other peoples’ inputs.
https://docs.google.com/spreadsheets/d/1OqAwmOmF4L9BU2g7rNhM07pA6dJ1enwJ6Vc2w9_nxaA/edit?usp=sharing
I will keep a running tab of what you are finding. Have fun! Until next time!
2/6/19
We started the class with a discussion of risk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates:
http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html 
If you want to see my updated perspective on risk free rates, try my data post on the issue from earlier this year:
https://aswathdamodaran.blogspot.com/2019/01/january-2019-data-update-2-message-from.html 

We just started on the discussion of equity risk premiums but the contours of the discussion should be clear.
a. Historical equity risk premiums are not only backward looking but are noisy (have high standard errors). You can the historical return data for the US on my website by going to
http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html
Click on current data, and look to the top of the table of downloadable data items.
b. Country risk premium: The last few months should be a reminder of why country risk is not diversifiable. As you see markets are volatile around the world, I think you have a rationale for a country risk premium. You can get default spreads for country bonds on my site under updated data. If you are interested in assessing and measuring country risk, to get from default spreads to equity risk premiums, you need two more numbers. The first is the standard deviation for the equity market in the country that you are trying to estimate the premium for. Try the Bloomberg terminal. Find the equity index for the country in question (Bovespa for Brazil, Merval for Argentina etc.) and type in HVT. This should give you the annualized standard deviation in the index - change the default to weekly and use the 100-week standard deviation. Do the same for the country bond in question. The two standard deviations should yield the relative volatility. If you have trouble finding either number, just multiply the default spread by 1.4 to get a rough measure of the country risk premium.  If you want my estimates of country risk premiums, check under updated data on my website. The direct link is below:
Finally, The post class test and solution are attached. Until next time!

Attachments: Post-class test and solution.

2/7/19

In class on Monday, we started with the claimholder consistency principle, arguing that there are two ways to value equity: discount cash flows to equity at the cost of equity or discount cash flows to the firm at the cost of capital and then subtracting out debt. Done right, I argued that you should get the same answer. I hope that you will have a chance to try the first weekly challenge. It starts simple but it will test you on your implicit assumptions about valuation. It does not have to be turned in to me and it will not be graded. I will post the solution on Sunday and you can check your answer out. Just another prod on the project. Please pick a company and find a group soon. If you are on the orphan list and are still having trouble finding a group, let me know. Until next time!

Attachment: Weekly challenge #1

2/8/19
Just two quick notes. The first is that I did put up an in-practice webcast today. It is a very basic webcast on how to read a 10K, using P&G as my example. The links are below:
Downloadable video:  http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/Reading10Knew.mp4 
YouTube Video:   https://youtu.be/UzUJzdn7c2w?list=PLUkh9m2BorqmRAGzJb5OIvTAKZZu9HWF- 
P&G 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/Reading10KPG.pdf
P&G Valuation (excel spreadsheet): http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/P&Gvaluationfixed.xls
I had mentioned that S&P Cap IQ was a great resource to use for data, but It turns out that you have to go to self-register to be able to access it. Until next time!
2/9/19
The second newsletter is attached. As you browse through it, remember the weekly challenge that I sent out and see if you can give your best shot. The solution will come tomorrow.

Attachment: Issue 2 (February 9)
2/10/19
In the week to come, we will continue our discussion of discount rates, with equity risk premiums taking up much of the discussion time tomorrow and spieling into Wednesday. We will start tomorrow’s class with the attached test on risk premiums. So, if you get a chance, give it your best shot. Also I was checking out the Google shared spreadsheet on my first valuation of the week. Well done! I see 85 of you have tried to value the franchise. You can still do it, if you have not done it already. If you have already forgotten about it, you can find the details on the webcast page for the class.
http://www.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqUGspr19.htm

Until next time!

Attachment: Risk Premiums: A test

2/11/19

In the session today, we started by doing a brief test on risk premiums. After a brief foray into lambda, a more composite way of measuring country risk, we spent the rest of the session talking about the dynamics of implied equity risk premiums and what makes them go up, down or stay unchanged. We then moved to cross market comparisons, first by comparing the ERP to bond default spreads, then bringing in real estate risk premiums and then extending the concept to comparing ERPs across countries. Finally, I made the argument that you should not stray too far from the current implied premium, when valuing individual companies, because doing so will make your end valuation a function of what you think about the market and the company. If you have strong views on the market being over valued or under valued, it is best to separate it from your company valuation. I am attaching the excel spreadsheet that I used to compute the implied ERP at the start of February 2019. Play with it when you get a chance. Post class test and solution attached.

Attachments: Post class test and solution

2/12/19
You did such a good job with the Apple valuation that I decided to stay with another high profile company for this week’s valuation and it is the other company that I wrote about tin my Apple blog post, Amazon. I have not been obsessed with Amazon since its early days, but everything I do, when valuing young companies, I learned the hard way, trying to value Amazon in 1998. I have valued the company every year since. I have bought it four times during its lifetime and sold it four times. After my September 2018 post (http://aswathdamodaran.blogspot.com/2018/09/amazon-and-apple-at-trillion-follow-up.html ), I sold short on the stock for the first time in my life. I was terrified, but I got lucky, and my short sale closed out at $1312. A few days ago, Amazon came out with its most recent 10K (annual report).
Most recent 10K: https://ir.aboutamazon.com/sec-filings/sec-filing/10-k/0001018724-19-000004 
The stock is back up to $1626 today and my most recent valuation is at the link below:
Amazon valuation in February: http://www.stern.nyu.edu/~adamodar/pc/blog/AmazonFeb2019.xlsx
As with the Apple valuation, I have created a shared Google spreadsheet and the link is below:
https://docs.google.com/spreadsheets/d/1mLahSy0oB9O_9Qwojny7XNZj-mdRwsXYWJ1rn8CEr-k/edit?usp=sharing 
As a side note, I am an Amazon Prime member and I have been fascinated by how Amazon has used Prime to create an army that it can send out disrupt any business. In fact, I used my user-valuation platform to value a Prime member and the entire service in 2017. It is dated, but you can update the numbers yourself and see what Prime is worth to Amazon:
http://aswathdamodaran.blogspot.com/2017/10/loss-leader-or-value-creator.html
Until next time!
2/13/19 about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things.
We then started on the cost of debt, starting with a definition of the cost of debt as a long term, current cost of borrowing and laying out a procedure for estimating this cost. Next session, we will complete the cost of capital discussion and move on to cash flows. I am attaching the post class test and solution for today's class. 

For this week’s weekly challenge, you will be looking at equity risk premiums. There is a lot of mythology about equity risk premiums and the best way to separate the truth from fiction is to look at the data. That is what we do in this week’s challenge. The attached dataset contains my estimates of implied ERP each year, with the T.Bond rate, the T.Bill and the Baa bond default spread each year. Your mission, if you accept it, is to play Moneyball with the data and to try and answer a few questions:
1. What, if any, relationship is there between the ERP and interest rates (T.Bond and T.Bill)?
2. What, if any, relationship is there between the ERP and bond default spreads?
3. Given interest rates today and the default spread today, what would you expect the ERP to be today?
4. Given the actual ERP, what does this tell you about stocks being cheap or expensive?
Have fun with the numbers. Pull out your statistical tools, rusty though they might be, and use them.

As I was sending this weekly challenge out, I realized that I never sent you the solution to the first weekly challenge. I have added the link to the webcast page for the class, but the link where you can find it is below:

Until next time!

Attachments: Post class test and solution, Implied premium challenge, data

2/14/19
I want to check to see where you are on the project. Assuming that you have picked a company, joined a group and downloaded the financials, I hope that you have estimated a risk free rate in the currency of your choice. Once you have that, please try the following:
  1. Get a geographical breakdown of the countries/regions of the world that your company operates in. It should be in your annual report or financial disclosure forms somewhere. If you cannot, them's the breaks...
  2. Get the total equity risk premium and country risk premium for the countries/regions: If you want to do this yourself, the weekly challenge will give you a template. If you want to take a short cut and use my estimates of country risk premiums, that is fine too.
  3. Get a weighted average of the country risk premiums: You can use revenue weights of the country/region to compute the weighted average.
I will be posting two valuation tools webcasts tomorrow, one on the risk free rate and one on estimating equity risk premiums that you may (or may not) find useful. 

Speaking of valuation (and that is always all I am speaking about), I don’t know whether you have had a chance to see the valuation of the week yet, but if you have not, please take a look. The subject is Amazon, a shape shifting superstar (either Thanos or Superman, depending on how you view it)
2/15/19 First things first. I hope that you have had a chance to register for S&P Capital IQ. Second, there are two tools webcasts are up this week. The first one is on risk free rates and the second on implied equity risk premiums.
Risk free Rates
Additional material:
Implied Equity Risk Premiums
The webcast uses the February 2013 spreadsheet, but I have tweaked the spreadsheet a little bit and the cell numbers have changed in the updated version, but the process remain the same. I hope that you get a chance to watch one or both!
2/16/19

The weeks are starting to build and class is well on its way. If you have been away, mentally or physically, please read the newsletter to see where we are and where we are going.

Attachment: Issue 3 (February 16)

2/18/19
I hope that your weekend went well. I also hope that you got a chance to try out the weekly challenge that I sent you. If you did, you got to test out your rusty excel statistics tools or perhaps Minitab. I am attaching both the weekly challenge and the solution, with the data updated through 2018. Give it a look, when you get a chance.

This week, we will continue our DCF discussion by putting to rest discount rates tomorrow and then moving on to earnings and cash flows. If you want to start applying what we talk about in class quickly to your company, I would suggest printing off your company’s most recent income statement and looking at the footnotes to see if the company has operating lease commitments. In tomorrow’s class, I will argue that accounting makes a hash of both operating leases and R&D and how and why we have to fix the accounting mistake before we do valuation. On Wednesday, we will keep going on cash flows, bringing in questions about accounting fraud and how to estimate free cash flows to equity. 

Attachment: Weekly Challenge #2a Solution

2/19/19
In my last two valuations of the week, I looked at two of the most valuable firms in the world, coming off a decade of success in their businesses. In this one, I am going to look at a company that is approaching the end of a long and illustrious life, GE. Valuing GE has always been a nightmarish exercise, because of its multiple businesses and the presence of a bank (GE Capital) in its midst. It is now facing the downsides of Jack Welch’s expansion of its financial services arm, and you may want to start with this blog post that I had on GE in November 2018:
http://aswathdamodaran.blogspot.com/2018/11/the-ge-end-game-bataan-death-march-or.html
I apologize for those of you who may be offended by my use of the Bataan Death March (I heard from a lot of people who claimed to be…) , but my point is that this is not a story that is likely to have a happy ending.

Since I did that valuation, GE has had one earnings call and you can find the link to that call here;
https://www.ge.com/investor-relations/sites/default/files/ge_webcast_presentation_01312019.pdf 
However, they have not filed their 10K (in contrast to Apple and Amazon that had full filings with the SEC almost immediately after their earnings calls.) There was information in the earnings call on selected items and I am attaching the S&P Capital IQ reports with 2018 preliminary numbers.
http://www.stern.nyu.edu/~adamodar/pc/blog/GEFinancialsFeb19.xlsx 
Finally, I used the GE analysis to draw a contrast between valuing a company and pricing it, and you can read about the contrast in the blog post. My updated value per share for GE is now down to $9.54, with much of the collapse coming from the imposing in the power division’s revenues/earnings. My updated pricing, though, is now at $15.76. You can find these numbers at the link below:
http://www.stern.nyu.edu/~adamodar/pc/blog/GEinFeb2019.xlsx
The stock was trading today at $10.13, higher than the value and lower than the price. Since I bought GE shares right after my blog post in November at about $8.00/share, I was faced with an existential question (at least at the investment level). Am I an investor (driven by value) or a trader (looking at pricing)? I had to do what is consistent with my philosophy, which is to sell. Your valuation, pricing and decision may be different. So, if you are up for it, try it out and enter your numbers in the Google shared spreadsheet:
https://docs.google.com/spreadsheets/d/1kurYuizs-PV2oBYv8mPnyjO2eapqnZ5gg9JSxgyQ984/edit?usp=sharing
2/20/19
In today’s class, we started with computing debt ratios for companies and how to deal with hybrid securities.. If you are interested in getting updated default spreads (on the cheap or free), try the Federal Reserve site in St. Louis:
https://fred.stlouisfed.org
These are spreads on indices created by rating, updated daily. Neat, right?

We then moved on to getting the base year's earnings right and explored several issues:
1. To get updated numbers, you should be using either trailing 12 month numbers or complete the current year with forecasted numbers. In either case, your objective should be to get the most updated numbers you can for each input rather than be consistent about timing.
2. To clean up earnings, you have to correct accounting two biggest problems: the treatment of operating leases as operating (instead of financial) expenses and the categorization of R&D as operating (instead of capital) expenses. The biggest reason for making these corrections is to get a better sense of how much capital has been invested in the business and how much return this capital is generating.
Post class test and solution attached. (I know a couple of the questions are about tax rates and normalizing income, but I think you can handle them).

Attachments: Post class test and solution

2/20/19

As we switch gears and move from discount rates to cash flows, you may find this weekly challenge helps you cement the basics. Give it your best shot, and as always, the solution will be coming your way on Sunday.

Attachment: Weekly challenge #3

2/22/19
 know that you have big and fun plans for the weekend and it is my job to ruin them. If you feel the urge to catch up on your project, I am going to give you the capacity to do so by posting not one, not two, but three in-practice webcasts:
1. Trailing 12-month numbers:  In the webcast for this week, I look at how to compute trailing 12 month earnings from a 10K and a 10Q: 
The most productive use of the webcast is to print off the most recent annual and quarterly report for your company and work with your company’s numbers.
2. Converting leases to debt: I have also posted a second webcast on converting leases to debt which takes you through the process of which numbers to use in this conversion and how to deal with loose ends (like the lump sum that is often given for past 5 years).
3. Converting R&D to capital expenditures: We also talked about converting R&D from operating to capital expenses. I use Microsoft from a year gone by to illustrate this concept:
Incidentally, to add to your stress, I just want to remind you that the first quiz will be a week from next Monday (on March 4). I will send you more information on the what and how this weekend.
2/23/19

Last week, we completed our discussion of discount rates and started on how best to estimate cash flows. This week, we will complete that discussion and move on to the scariest part of valuation, which is forecasting future growth and cash flows.

Attachment: Issue 4 (February 23)

2/24/19
This week, we will build on the discussion of earnings from last week by first bringing in capital expenditures and working capital, and then moving on to the really messy task of estimating future growth & cash flows. Also, if you had a chance to work on the third weekly challenge, the solution is at the link below in two parts:
http://people.stern.nyu.edu/adamodar/pc/wkch/wkch3.xls
http://people.stern.nyu.edu/adamodar/pc/wkch/wkch3ratings.xls
Even if you did not try the challenge, it may be worth reviewing.
2/25/19

In today’s class, we continued with our discussion of earnings, by looking at what to do about one-time or unusual items, and how to after-tax the income, We also looked at the challenge of money losing companies. We then moved on to estimating reinvestment in all its forms, and its links to growth. In the final part of the class, we started on estimating growth, by looking at the allure of past growth and why it is not a fact but an estimate. The post class test and solution are attached.

Attachments: Post class test and solution

2/26/19
The first quiz is coming up and I wanted to cover some logistical details.
1. Quiz location and timing: The quiz will be from 3.30-4 on Monday, March 4. There will be an extra room to take the quiz. Please see below for where you should go for the quiz:
If your last name begins with Go to
A - J KMEC 2-60
K - Z Paulson
There will be class after the quiz. So, please come to Paulson, when you are done with your quiz.
2. Quiz coverage: The quiz will cover everything through up until growth (about slide 152); growth is not on this quiz. It will therefore include the big picture sessions on valuation, discount rates and cash flows.
3. Past quizzes: I am reposting the links to the quizzes from the past. Since some of the older quizzes contain questions that may not be a little tangential, I would suggest starting with the last quiz and working backwards.
As you work through these quizzes, please do remember that I will be grading the quizzes, not a computer or a TA. I grade on process. When you do your quiz, please show your work, with your solution and I am perfectly open to alternate solutions to problems, if I feel that you have been logical and consistent and used all of the information in the problem.
4. Quiz review webcast: I have a webcast that I have put together where I take you through the material that will be covered on the quiz. It is about 35 minutes long and it may help you get ready for the quiz (or not)… 
I hope that you find it useful. 
2/26/19
Last Friday, Kraft Heinz reported earnings with a trifecta of bad news, languishing operating numbers (flat revenues & declining margins), an accounting irregularity (with an SEC subpoena) and a massive impairment of goodwill, sending the stock price down by more than 25%. 
https://www.marketwatch.com/story/kraft-heinz-loses-a-lot-of-cheese-as-earnings-send-stock-plunging-toward-record-low-2019-02-21
While companies reporting bad numbers is not uncommon, what makes Kraft Heinz special is the pedigree of its lead investors, with Berkshire Hathaway owning 26% and 3G Capital (a Brazilian private equity group with an unmatched reputation for financial acumen and ruthless cost cutting. Investors who followed Buffett into the stock were not only shocked but claimed to be betrayed, that the oracle would mislead them. While I am working on a post on why this unquestioning faith in investment Gods is dangerous and delusional, I am posting my valuation of Kraft Heinz. 
http://www.stern.nyu.edu/~adamodar/pc/blog/KraftHeinz2019.xlsx
The financial information, including the most updated earnings report, can be found at this link:
http://ir.kraftheinzcompany.com/news-releases/news-release-details/kraft-heinz-reports-fourth-quarter-and-full-year-2018-results
I find the company close to correctly valued, with a value of $34.88, almost equal to the stock price of $34.23. While I would not buy the stock at today’s price, I would not sell, if I had been owning the stock prior to the earnings report (thank God, I was not). As always, you can enter your numbers in the Google shared spreadsheet;
https://docs.google.com/spreadsheets/d/1n8iEhQFq_j82BzBaHJza8xQA9EtsrVKQJFjXSDZfXTw/edit?usp=sharing 
2/27/19

We continued our discussion of growth by first looking at the limitations of analyst estimates of growth and then examining   the fundamentals that drive growth. Starting with a very simple algebraic proof that growth in earnings has to come either from new investments or improved efficiency, we looked at how best to estimate growth in three measures of earnings: earnings per share, net income and operating income. With each measure of earnings, the estimation of growth boiled down to answering two questions: (1) How much is this company reinvesting to generating for future growth? (2) How well is it reinvesting? (3) How much growth is added or lost by changes in returns on existing investments? In the next session, we will continue this discussion after the quiz.

Attachments: Post class test and solution

2/28/19
capitalizing them and view it as prep for the final. If you can estimate the free cash flow to the firm and free cash flow to equity last year, you are well on your way.
Now that we are on to growth, you can try a couple of exercises with your company:
1. Compute historical growth, across different time periods, in different measures, and using arithmetic and geometric averages.
2. See if you can find analyst estimates of growth for your company and whether you can decipher what measure (revenues, operating income, net income or earning per share) the estimate is for.
3. Check your fundamentals
The weekly challenge for this week may help you understand the connection and I hope you get a chance to try it. 

Attachments: Weekly challenge

3/1/19
Accounting returns can be messy and misleading but they are a key input into estimating growth and the value of growth. In this webcast, I look at the process of estimating accounting returns, using Walmart as my example:
Webcast: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/ROIC.mp4 
Walmart 10K (2013): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmart10K.pdf
Walmart 10K (2012): http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmart10Klastyear.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/ROIC/walmartreturncalculator.xls
An updated version of the return calculator is attached.
3/2/19
I know that you are busy and I have a guess about what you are working on. I have attached the newsletter, on the odd chance that you may want to take a look at it. Incidentally, I do want to draw your attention to two things that I did during the week that you may find useful (or perhaps not):
1. I did post my valuation of Kraft Heinz, with a cautionary tale about blindly following investment Gods. The link is here:
https://aswathdamodaran.blogspot.com/2019/02/the-perils-of-investing-idol-worship.html
2. I updated the equity risk premium for the S&p 500 to March 1, 2019. It is now 5.36% (down from 5.53% on February 1 and 5.96% on January 1).
http://www.stern.nyu.edu/~adamodar/pc/imprprem/ERPMarch19.xlsx
Some final thoughts. Don’t drive yourself into a frenzy for the quiz. It is just a quiz, just 10% and if you do badly, you can make it go away. That said, it is better to do well than badly. So, good luck and see you in class on Monday (and don’t forget to go to the right room):
If your last name begins with Go to
A - J KMEC 2-60
K - Z Paulson

Attachments: Issue 5 (March 2)

3/3/19
I’ll keep this brief since you are probably busy preparing (if you say, “for what”, I think that you are in big trouble). A reminder again about tomorrow’s quiz and quiz seating. The quiz is in the first 30 minutes of class (from 3.30-4.00) and it is open-book, open-notes but no laptops or connectivity. The seating is as follows:
If your last name begins with Go to
A - J KMEC 2-60
K - Z Paulson
There will be class after the quiz. So, please come to Paulson, when you are done with your quiz. There will be class after the quiz. Finally, in case you tried the weekly challenge this week, the solution is attached. 

Attachments: Weekly Challenge #4 solution

3/3/19 As you might have heard, NYU has canceled classes for tomorrow. Obviously, I cannot force you to trek through the snow to take the quiz (though I thought about doing that). The quiz will be moved to Wednesday, with the logistical details remaining unchanged, but I will be putting a lecture online tomorrow, so that we do not fall too far back in class. Please watch the lecture to keep up with the class. In addition, I think it is the least I can do, given how much NYU charges you for tuition; I am sure that there is no refund due for the class cancellation tomorrow. 
3/4/19
I am not sure whether you are relieved or pissed off about today. If you were ready to go, this sunny snow day is not what you wanted to interrupt your plans. If you were not, it gave you two extra days to prepare. From my perspective, it was a waste of day of class, and I don’t believe in wasting class days. I put together a webcast for what I would have done, if today had been a full-day session:
https://youtu.be/ZTw3V_m-I9g
I know that you are busy preparing for the quiz, but I would really like you to watch this class (it is only 50 minutes)  before Wednesday’s class, since I will build on it and keep moving, after the quiz. You can get the slides and post class test/solution at the links below:
During the session, I continued with the discussion of growth, moving from fundamental growth to how to estimate growth when returns on capital and margins are changing. I then spent some time on the terminal value calculation, and the rules to follow with terminal value. Since this will make or break your valuation, I would encourage you to watch this section until you have it nailed down. I closed the session by examining how to pick the right model to use to value your company. So, keep working on the quiz but please fit this webcast in, before Wednesday. See you in a couple of days. 

Attachments: Post class test and solution

3/5/19
I know that a valuation of the week is not exactly what you want to work on right now, but since the prospectus got filed last Friday and things are still fresh, I decided to take Lyft and make it my valuation of the week. For those of you who are unfamiliar with the ride sharing business, my suggestion is that you start with a series of posts that I put up on the topic in 2015. They are dated, in terms of numbers, but not in terms of challenges:
  1. On the Uber Rollercoaster: http://aswathdamodaran.blogspot.com/2015/10/on-uber-rollercoaster-narrative-tweaks.html
  2. An early blog post on Uber versus Lyft: http://aswathdamodaran.blogspot.com/2015/10/dream-big-or-stay-focused-lyfts-counter.html
  3. The Future of Ride sharing: http://aswathdamodaran.blogspot.com/2015/10/the-ride-sharing-business-playing-pundit.html
Once you have that background, open up the Lyft prospectus:
https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htm
For those of you who have never used a prospectus, you will notice that it looks a lot like a 10K or annual report, but contains IPO-specific information including how much the company is planning to raise in the IPO and what it plans to use the proceeds for. Since this is the first round, Lyft has not even decided on how much to raise, but it is rumored to be somewhere in the order of $2 billion. Finally, you can see my Lyft valuation at the link below:
http://www.stern.nyu.edu/~adamodar/pc/blog/LyftIPO2019.xlsx
It is a very user-friendly valuation, where rather than inputs on numbers, which are in the prospectus anyway, I ask you for story choices (you will see what I mean when you open the spreadsheet). Make your choices, and when ready, please go to the Google shared spreadsheet and let the world know:
https://docs.google.com/spreadsheets/d/1MIrA1CXMPJzvPaoRetcNFbQGWLaAdjro0fYFArbUGPU/edit?usp=sharing
Let’s see what the bankers price the offering at, and if their pricing is close to the crowd valuation, that is occasion for worry, since their job is to price the offering. I am working on a blog post that includes the valuation, but you get an advance view. 
3/5/19
As you know, tomorrow is the day of the quiz in the first 30 minutes of class (3.30-4). As a reminder, please go to the room that you have been assigned:
If your last name begins with Go to
A - I KMEC 2-60
J - Z Paulson
The quiz is open book, open notes, open iPad but no laptops. It will cover everything that we did through last Wednesday’s class.. I know that some of you are stressed out, and I will not ask you to relax, because that never works. Just remember that there are no tricks on the quiz, that I am not trying to trip you up and I really, really want you to do well. In fact, if you have any last minute doubts, I will be up until midnight and will be glad to answer your questions. If you are done with the quiz preparation, please try to watch yesterday’s online lecture. You can find it at:
3/6/19

The good news is that the first quiz is over and I will let you know as soon as it is ready to be picked up.  If you were able to hang in there mentally and physically, we started on the discussion of the loose ends in valuation by looking at how best to value cash.  We will continue to look at other loose ends next week. In addition, if you have not watched Monday’s online session yet, please do, because it contains a section on terminal value that you have to nail down. The post class test and solution relate that terminal value section. I have also attached a weekly challenge built around terminal value, if you want to give it a shot. 

Attachments: Post class test and solution

3/7/19
The quizzes are graded and here are the details on how you can pick them up and check your score:
  1. Where? The quizzes are on the ninth floor of KMEC. As you come off the elevator and before you get to the door leading into the offices, look to your right and you will see a table. The quizzes are on the middle shelf. (I am also returning my MBA valuation quizzes today) and they on the top shelf.
  2. How? They are in alphabetical order, face down and sorted neatly into two piles. Please just take your quiz, don’t browse and do not mess with the sorted stacks. I have cameras installed that are watching you at all times and drones ready to attack, if you try!
  3. Score check: Once you get the quiz, please take a look at the attached solution. It includes my grading template. You will notice that there are two solutions. The first one (EquQuiz1asol) has Valdez as the company name in the first problem and the second one (EqQuiz1bsol) has Suarez as the company name for the first problem.  If you feel that I have been unfair to you, you can either come into my office or take a picture of the section of the quiz with which you have a grading issue and send it to me. (I have also put hard copies of the solutions with your quiz. Look on the shelf below your quizzes). Please do not bug Aditya, the TA, since I grade the quizzes.
  4. Grade check. You can also check your quiz score against the distribution that I have attached. Notice that this quiz is very heavily skewed towards high scores. So, if you got a high score, congratulations, but you have lots of company and the next two quizzes may be more difficult. If you did badly, also remember that not only is this quiz only 10% of your grade but that your worst quiz grade, if you take all the quizzes, will be replaced by your average score on the other exams. 

Attachments: Solution (a or b) as well as the distribution of grades

3/8/19
In this week’s webcast, I look at the terminal value and how to run diagnostic checks on it to make sure that you have been internally consistent and grounded while estimating this number. 
Webcast: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/terminalvalue.mp4 
Sample DCF: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/TermValueCheck/termvalueDCF.xls 
Diagnostic Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/TermValueCheck/termvaluecheck.xls 
Hope you get a chance to check it out. 
3/9/19
This may be your weekend to forget valuation, but I am afraid that I have to intrude. The most recent newsletter is attached. Also, if you have not picked up your quiz, and you are in school this weekend, please pick it up on the ninth floor of KMEC. Finally, if you are interested in the Lyft IPO, and perhaps even tried your hand at the valuation of the week, here is the post that I put up on the company:
https://aswathdamodaran.blogspot.com/2019/03/lyft-off-first-ride-sharing-ipo.html

Attachments: Issue 6 (March 9)

3/10/19 This coming week will be our last week of classes before the break. That is both good news and bad news. The good news is that you will be blessedly free of my harassment for a week or so. The bad news is that we are now half way through the semester. So, if you have not picked a company, you should. If you have, you should have the financials. If you have the financials, you should be working on the valuation. I think you get the picture. 
3/11/19
Today we put the last loose ends to rest. First, we completed the discussion of cross holdings and why they are so difficult to deal with in valuation. Second, well looked at complex businesses and how to incorporate our concerns into value. Then, we went back and looked at defining debt. While we used a narrow definition of debt, when computing cost of capital, we argued for using a broader definition of debt, when subtracting from firm value to get to equity value. Next, we talked about how best to deal with both currently outstanding employee options and potential options grants in the future. With the former, we argued for using an option pricing model to value the options and netting that value out of equity value, before dividing by the number of shares outstanding. With the latter, we suggested incorporating the expected cost into the operating expenses, thus lowering future earnings and cash flows. If you are still a little shaky on why stock-based compensation should not be added back as a non-cash expense, please read this post:
Again, I plead (beg, cajole) that you keep moving on your DCF. It is daunting if you just keep thinking about doing it. It is actually much easier to just do it.

Attachment: Post class test and solution

3/13/19

In today’s sessions, we tied up the last loose ends on stock based compensation and started on full fledged valuation. Rather than dive into numbers, I argued that you need to start with a  business story, check to make sure it is possible, plausible and probable, convert the story into valuation inputs and let the valuation play out. If you are interested in this part of valuation or think you may have to work on your left or right brain, I have a book on stories and numbers (Narrative & Numbers, Columbia University Press) that you might life. I will send you two more emails before the end of this week and give you a break until the following Saturday. Have a great week off school (and try to get some valuation done)! 

Attachments: Post class test and solution

3/14/19
I know that many of you are either on your break already or mentally there, and I had promised no nagging, but one last email before you go about sundry items:
1. Quizzes: There were a few quizzes that never got picked. I am assuming that their owners either don’t want to know what’s in them. Those quizzes are now in my office and unfortunately, they cannot be picked up until after break.
2. Project: I know that I have been nagging you about getting the intrinsic value portion of your project done soon, to allow for the feedback on March 29. You are welcome to use my data, spreadsheets and valuation tools webcasts along the way. If you are planning to get caught up during the break, I have added a webcast on employee option to help you on your way. 
Incidentally, if you find yourself lost among the host of spreadsheets on my site, go with the ones that have a ginzu in the name. They are the most comprehensive, and in an Orwellian this, the simple version of each of the spreadsheets usually is the one that works across most companies. (Fcffsimpleginzu is the one that will look most familiar, because I use it in almost 80% of my valuations).

Most of all, just remember to relax and have fun, and you will not hear from me until a week from Saturday. Enjoy the break! 
3/23/19
You must admit that I was remarkably self-restrained during the break and fought the urge to send you more and more messages. That time is now over and I am baaaaaaaack! 
1. Class: If you have completely lost track of where we are in the class, I would start with the newsletter, where I mention where we are on the class and where we are going.
Incidentally, if you missed the last session and tried to catch up by watching the webcast, you have discovered that the audio is messed up after about 20 minutes of the class. Since this class is critical to understanding how to build a valuation, I have an alternate. It is a Google talk that I gave on connecting stories to numbers (the topic of season 13) and you can find it at https://www.youtube.com/watch?v=uH-ffKIgb38. Please watch before class on Monday,.

2. The Project: As you know (or should know), your DCF is due next Friday (March 29) for review. It is true that there is no grade attached to it but it you chance to get some feedback on the session. To advance you on the valuation, I have a tools webcast on dealing with equity options in a company,. Let’s face it. Employee options that your company has granted and continues to grant may be a source of imperfection. I know that we went through the mechanics in class. First, value the outstanding options, using an option pricing model. Second, subtract the value of the options from the equity value that you estimated in a DCF. Third, divide the remaining value by the number of shares outstanding (the actual number, not the diluted number). The mechanics of doing this can be tricky and that is why last week's weekly challenge was built around options. After you have tried the challenge, you may also want to watch this webcast that I put together on doing this in practice. I used Cisco, a monster option granter, to illustrate the mechanics. You can find the links below:

3. Lecture Note packet 2: Finally, we are approaching the end of the first lecture note packet for the class. When you get a chance, please print off or download or buy the second packet:
See you in class in a couple of days.

Attachments: Issue 7 (March 23)

3/24/19
This week, we will continue onDCFs and what I will term the dark side of valuation, where you value difficult to value companies. The DCF is due by late Friday (March 29) (try to get it in by 5 pm, but if not, 6 pm or 7pm..). If you can get it in earlier, all the better. A few notes on the submission:
1. Individual, not group: This portion of the submission can be done individually and should be done individually rather than as a group, The feedback is specifically for you.
2. Submission content: An Excel spreadsheet will do, with notes embedded on your story and any specific assumptions
3. Submission subject: Use “My Perfect DCF” in your subject
Remember that this DCF is for feedback, not a grade, but work on it as if were your final valuation. That way, the feedback will be more focused and perhaps more useful.  To put a bow on this part of the class, I have a blog post that you may find enjoyable about dysfunctional DCFs. 
3/25/19
In today's class, we started with a quick review of narrative changes, shifts and breaks and how earnings reports, in particular, can alter your narrative for a company. Since many of you will be dealing with new earnings reports, I thought you may find these two posts of interest in how narratives shift, and with them, values:
Reacting to Earnings Reports: http://aswathdamodaran.blogspot.com/2014/08/reacting-to-earnings-reports-lets-get.html
Narrative Resets: http://aswathdamodaran.blogspot.com/2015/08/narrative-resets-revisiting-tech-trio.html 
We started with three conventional valuations, one of Con Ed, another of  3M and the third of the S&P 500. We then started on the dark side of valuation and we will continue on that path on Wednesday.

I hate to be a nag but your DCF is due for feedback on Friday. Again, I will emphasize that I will not be grading your DCF. Here are some more details about this submission:
1. All you will be doing is sending me your spreadsheet for your company (it could be one of my spreadsheets that you have adapted to your company). I have made a big deal about story telling but you can put your story into the spreadsheet, generally on your input page. I like to connect my story to individual assumptions. I have attached my Snap example.
2. I will take a look and provide feedback which can range from “This looks good. Nothing more to do” to “These numbers are at war with each other”, with specific comments on inputs that worry me. You are welcome to modify your valuation to reflect my feedback or to ignore it. 
3. If you are already done, you can send it to me any time you feel ready to do so. Just one request. Given that I have two classes of 300 and emails can get lost, please make sure that you include “My Perfect DCF” in the subject line. Please don’t try to be clever and modify this title since it is a computer algorithm that does not get either nuance or irony. 

Attachment: Post class test and solution

3/26/19
If you thought the last few months on Brexit have been chaotic, this week may take the cake, as the House of Commons grapples with as many as seven different options on Brexit, ranging from a No-deal Brexit to no Brexit at all. I am sure that analysts in the UK have stopped valuing companies, waiting for this uncertainty to resolve itself. However, your opportunities also abound when it is darkest. This week, I have taken easyJet, a UK company that is particularly exposed to Brexit, because it gets so much of its revenues from the EU, which has stringent rules on who can or cannot fly between EU countries, and tried to value it under different scenarios. You can read my valuation thesis here:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/Valuationofweek/easyJet.html
If nothing else, you will see how scenarios can be used to deal with uncertainty. The valuations themselves are at the links below:
  1. No Deal Brexit: http://www.stern.nyu.edu/~adamodar/pc/blog/easyJetNoDeal.xlsx
  2. Messy/Delayed Deal Brexit: http://www.stern.nyu.edu/~adamodar/pc/blog/easyJetMessyDeal.xlsx
  3. Smooth or No Brexit: http://www.stern.nyu.edu/~adamodar/pc/blog/easyJetSmoothDeal.xlsx
Once you have had a chance to work on these valuations, you are welcome to go in and enter your numbers in the Google shared spreadsheet:
https://docs.google.com/spreadsheets/d/1YUtsK3ryWjIpsUuTewcUr4B0D-WHHdIwYBLeuZstKwA/edit?usp=sharing
3/27/19
In today’s class, we started on the dark side of valuation, where we value difficult-to-value companies. We started the valuaton of young, growth companies by emphasizing that you will be wrong 100% of the time and that it was okay, because the market is usually even more wrong. I argued that to to value a young company, you have to visualize what you see as success for it and work backwards to get the numbers by year, and adjust this valuation for the likelihood that the company will not make it. We then moved on to companies in transition and how you can arrive at two values for these companies: a status quo value and a changed-management value and how you have to take an expected value. 

One final note. Your second quiz is on Wednesday. As with the first one, it will be in two rooms and your seating arrangement is as follows:
If your last name begins with Go to
A - P Paulson
Q- Z KMEC 2-60
I have put the review session for quiz 2 up online (on the webcast page for the class) with the presentation. The links are below:
Presentation: http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/valquiz2review.pdf
Webcast: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/valquiz2review.mp4
You can also find all past quizzes with the solutions in the following links:
All past quiz 2s: http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/quiz2.pdf 
Quiz 2 solutions: http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/quiz2sol.xls 

Finally, this may be piling on, but I also have a weekly challenge on management options, which you can consider to be review for the quiz as well.
http://www.stern.nyu.edu/~adamodar/New_Home_Page/wkch/wkch5.htm

Attachment: Post class test and solution

3/28/19
For those of you who have sent in your DCFs already, thank you. For those of you still working on them, keep at it. For those of you who will pass on the option tomorrow, I understand. As you work through the mechanics, please keep in mind the following:
  1. You will be turning in a spreadsheet, not a report.
  2. Your submission for tomorrow will be individual, not as a group.
  3. You are welcome to use any of my spreadsheets. The most forgiving and versatile of my spreadsheets is http://www.stern.nyu.edu/~adamodar/pc/fcffsimpleginzu2019.xlsx
  4. Each of your valuations tells a story. Try to make it explicit and built it into your spreadsheet. In a prior email, I said that I was attaching an example of what I meant from my Snap valuation and I never did. It can be found in my post at the time of the Snap IPO:  http://aswathdamodaran.blogspot.com/2017/02/a-snap-story-valuing-snap-ahead-of-its.html 
Don’t put too much pressure on yourself. This is only for feedback. Try your best.
3/29/19 No valuation tools webcast this week, since you already have done so much valuation for your project and your quiz is next week. The DCFs have been rolling in, and I am about 250 valuations behind on my emails, but I am working on catching up,  The quiz is on Monday. It will cover all the material we covered through Wednesday (slide 306) and be non cumulative. (The review session and past quizzes are on the webcast page for the class: 
http://people.stern.nyu.edu/adamodar/New_Home_Page/equityUG.html
Finally, Lyft went public today and saw its stock price zoom more than 20% on the offering, for a market cap of more than $30 billion. The pricing game is in full flow. 
3/30/19

I am working through the DCFs and I hope to get you yours back as soon as I can. I am taking a break, though, and attaching your weekly newsletter, just in case you feel the urge to read something different.

Attachment: Issue 8 (March 30)

3/31/19
By now, many of you (about 200, by my count, out of a class close to 300) should have received back your DCF valuation back. If you have not received yours back, you should be getting it in the next few days. Rather than make myself into an all-knowing oracle (which I am not), t thought I would take you through the process I used to diagnose your DCF valuations.

Narrative checks
In class, I have made a fetish about connecting stories to numbers and I am going to stick with that fetish. As I looked at your valuations, I always stopped and asked what the underlying story you were telling about your company. You did a really good job, collectively, and I would classify the submissions into three groups:
1. Story-driven valuations: Many of you sent in valuations that not only had a story but tied inputs to that story and you are well on your way to understanding valuation as a craft.
2. Stories that don’t quite hang together: Some of you told stories that were at war with themselves (with different parts pulling in different directions) because you told individualized stories for each input.
3. Valuations with implicit stories:  While some of you may have no specific story in mind, your numbers told a story that you may or may not agree with. Thus, if you were valuing Amazon and your revenues in year 10 are 500 billion and your operating margin is 4%, the story that you are telling about Amazon is that it is going to continue to go for more revenue growth, sacrificing margins and that it will pulverize the rest of the retail business. In some of your valuations, the story seems at war with itself. Thus, if you have your company’s revenues tripling in a mature market and your margins also going to well above industry averages, your story is quickly becoming implausible. I would strongly encourage you to take a look at your valuation (look at your year 10 numbers specifically) and think about the story that you are telling. Otherwise, it is just a spreadsheet with a bunch of numbers.

Input page checks
Step 1: Currency check: What currency is this company being valued in and is the riskfree rate consistent with that currency? 
Right now, if you are valuing a company in US dollars, I would expect to see a riskfree rate of about 2.5% here.. though some of you used 30-year bonds rates which would give you a slightly higher value). if you are valuing your company in pesos or rubles, I would expect to see a higher riskfree rate, (Watch out for the tricky ones.. a Mexican company being valued in US dollars or a Russian company in Euros.. Your riskfree rates should revert back to the Euro riskfree rate, if this is the case)
Step 2: ERP check: Is the equity risk premium being used consistent with where the market is right now and where this company has its operations
If you are analyzing a company with operations only in developed markets, I would expect to see a number of about 5-6% here... That is because the current implied premium in the US is about 5.36% (March 2019). If you are using a premium of 4%, you will over value your company. If your company is exposed to emerging market risk, I would expect to see something added to the mature market premium. While I begin with the presumption that where your company is incorporated is a significant factor in this decision, it should not be the only one in this decision. Coca Cola and Nestle should have some emerging market risk built into them.
Step 3: Units check: Are the inputs in consistent units?
Scan the input page. All inputs should be in the same units - thousands, millions, billions whatever... What you are looking are units with far too many digits to make sense. (Check the number of shares. It is the input that is most often at variance with the rest, usually because you use a different source for it than the financial statements)
Step 4: Operating lease inputs
If you capitalize operating leases, make sure that you get the current year’s lease or rental expense in addition to the lease commitments. If you cannot find the former, enter a number equal to your first year’s lease commitment.
As a follow up, check the reinvestment rate for the firm. If it a weird number (900%, -100% etc.), it may be because something strange happened in the base year (a huge acquisition, a dramatic drop in working capital). A better choice may be to average over time.

Output page checks:
a. High Growth Period.
Start by checking the length of the growth period and the cash flows during the growth period. In particular,
- Compare the FCFF (or FCFE) to the EBIT (1-t) (or Net Income). Especially if you are forecasting cap ex, working capital and depreciation independently, compute an implied reinvestment rate
Implied Reinvestment Rate = 1 - FCFF/ (EBIT (1-t)  or 1 - FCFE/ Net Income
Thus, if you have after-tax operating income of 100 and FCFF of 95, your implied reinvestment rate is 5%. 
- Look at the expected growth rate over the period. Does it jive with your reinvestment rate? (If you see a high growth rate with a low reinvestment rate, the only way you can justify it is by calling on efficiency growth. For that argument to make sense, your current return on capital has to be a low number... 
- If you are forecasting operating income, cap ex, depreciation and working capital as individual line items, back out your imputed return on capital:
Imputed Return on Capital = Expected EBIT (1-t)/ (Base Year Capital Invested + Sum of all reinvestment through year t-1)
If you see this number taking off through the roof or dropping towards zero by the time you get to year 10, your reinvestment assumptions are unreasonable.
b. Terminal value
Start by checking to make sure your growth rate forever does not exceed your riskfree rate. Then follow up by
- Examining your reinvestment rate in your terminal year, using the same formula we used in high growth
- Backing out your implied return on capital (ROC = g/ Reinvestment Rate)
- Checking against your cost of capital in stable growth (you don't want to get more than 5% higher than the cost of capital and you do not want to set it lower than the cost of capital forever)
I have a spreadsheet that can help in this diagnostic (and there is a webcast that you can use as well from a few weeks ago)
One common error to watch out for is estimates of terminal value that use the cash flow in the final year, grow it out at the stable growth rate. That locks in your reinvestment rate from your last high growth year forever.
c. Cost of capital
As a general rule, your cost of capital should be consistent with your growth assumptions. Thus, you should expect to see betas move towards the stable range (0.8-1.2) and your debt ratios to rise towards industry average. Thus, your cost of capital in stable growth should be different from the cost of capital in high growth.
d. Final value of equity
Check for danger signs, including
- Cash and cross holdings becoming a huge percentage of value
- Options either being ignored or being a huge number

Market Price
As a final sanity check, look at the current market price. If your value is not even in the ballpark, go back and repeat all of the earlier steps...

Try it out with your own DCF valuation and then offer to do it for a friend... Then, take your toolkit on the road. Pick up a valuation done by an investment bank or equity research analyst and see if you can diagnose any problems in them. You are well on your way to being a valuation guru. I  have also attached a full set of diagnostic questions that you can consider in the context of valuation to this email. 

Attachment: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postmortem.pdf

4/1/19

After the quiz, we started by  looking at declining and distressed companies, arguing that you need to adjust your expected value for the likelihood of truncation risk or failure. WE then moved on to emerging market companies, and the challenges you face in valuing them. We will spend more time on the dark side in the next class.

4/2/19

Your quizzes are done and are ready to be picked up at the usual place (outside the front door of the finance department). They are in two alphabetically sorted files. Please don’t mess them up. I am also attaching the solutions and the distribution, just in case. Quiz a is the one with Lion Bank in problem 1 and Quiz b is the one with Tiger Bank in problem 1. 

Attachments: Quiz (a or b) and check out the solution (a or b) as well as the distribution of grades for the class.

4/2/19
valuing real companies, I decided that we should spend this week too on a “fun” valuation”. This is a throwback in time, but it is a valuation and pricing that I did of the Los Angeles Clippers, when Steve Ballmer paid $2 billion for the team. I explain how I value the Clippers and how I would value any sports franchise in this post:
http://aswathdamodaran.blogspot.com/2014/06/ballmers-bid-for-clippers-investment.html
You can find my valuation of the Clippers in this link:
http://www.stern.nyu.edu/~adamodar/pc/blog/Clippervaluation.xlsx
You can do one of the two things in this week’s valuation challenge. 
1. You can take my Clipper valuation and make your own assumptions (there are relatively few) and value the Clippers as of June 2014. 
2. You can then follow up by trying to price the Clippers, a preview of the pivot that we will be making away from valuation in the weeks to come. To help, I have raw data on sports franchises below:
For MLB, NFL, NBA and NHL: http://www.stern.nyu.edu/~adamodar/pc/blog/SportsTeamData.xlsx 
For European soccer teams: http://www.stern.nyu.edu/~adamodar/pc/blog/eurosoccerrawdata.xls 
For IPL (Indian cricket) teams: http://www.stern.nyu.edu/~adamodar/pc/blog/IPLrawdata.xls 
The IPL and Euro soccer data is a little outdated and you are welcome to update them, if you want. If you are a fan, you can pick your favorite team and using the raw data in these spreadsheets, try to value and price your franchise. 

On a different note, we are getting close to tying a bow on packet 1 of your notes and moving on to packets 2 &3. You can download them at the following links:
Packet 2: http://www.stern.nyu.edu/~adamodar/pptfiles/val3E/valpacket2spr19.pptx 
Packer 3: http://www.stern.nyu.edu/~adamodar/pptfiles/val3E/valpacket3spr19.pptx 
4/3/19 In today’s class we completed our excursion on the dark side, by finishing the discussion of emerging market companies and then moving on to financial service companies, contrasting the dividend discount model that we used in the days of innocence with a more complete FCFE model. We also looked at companies that derive the bulk of their value from intangible assets and why the accounting makes them more difficult to value and commodity companies, where being commodify-price neutral is critical and how simulations can help. We closed the class by starting to draw on the contrast between value and price, as a prelude to the pivot to pricing.
4/5/19
I am piling on now, and I am sorry. However, the clock is running and we do have stuff to get done. Two quick notes. First, next week, we will be starting on pricing and using multiples. One of the most confusing aspects of multiples is dealing with the variants of value out there: firm value, enterprise value and equity value. In this webcast, I look at what the differences are between these different numbers and how our assessments of leases & R&D can change these numbers. Start with this blog post:
http://aswathdamodaran.blogspot.com/2013/06/a-tangled-web-of-values-enterprise.html
Then watch the webcast:
http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/multiplecalc.mp4
You can download the presentation:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/multiplecalc/multiplecalc.pdf 
And the spreadsheet that goes through the calculations:
http://www.stern.nyu.edu/~adamodar/pc/multiplecalculator.xls
Second, I know that some of you are waiting for your DCFs to be returned to you and I am truly sorry that it is taking me so long. I have a few things on my to do list that need to get done first, but I promise that I will try to get them back by the end of this weekend.
4/6/19

It is a beautiful day outside (but then again, I am in La Jolla. I have no idea what New York looks or feels like today). Newsletter for the week attached. Have a great weekend!

Attachment: Issue 9 (April 6)

4/7/19
Just a quick reminder to download or buy packet 2 (I am not sure that the bookstore even has them…) before tomorrow’s class, since we start on pricing this week. Here is the link to packet 2, if you just want to print off the first 25-30 pages at least for class:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/valpacket2spr19.pdf
To get your pricing cap on, I would suggest reading this blog post of mine:
http://aswathdamodaran.blogspot.com/2013/10/twitter-ipo-why-good-trade-be-bad.html
I wrote in the aftermath of the Twitter IPO, but it could very have very well been written about Lyft. Hope you enjoy it. 
4/9/19
Many of you have picked up your quizzes already and that is good. If you have not, please do, since avoiding picking it up is not going to make it go away. On a different note, I know that you are done with valuation for the moment, but the beat goes on. In this week’s valuation of the week, I turn to Levi Strauss, which went public at about the same time that Lyft did, but with a vastly different background and structure. You can start with the prospectus, which is far less painful to read than the Lyft prospectus:
You can read my thoughts about Levi Strauss here:
And download the valuation here:
And, if you want, try your hand and enter the numbers here:
As someone who wears Levis 501s half the days of the year, I wear my biases openly. 
4/10/19
Many of you have picked up your quizzes already and that is good. If you have not, please do, since avoiding picking it up is not going to make it go away. On a different note, I know that you are done with valuation for the moment, but the beat goes on. In this week’s valuation of the week, I turn to Levi Strauss, which went public at about the same time that Lyft did, but with a vastly different background and structure. You can start with the prospectus, which is far less painful to read than the Lyft prospectus:
http://d18rn0p25nwr6d.cloudfront.net/CIK-0000094845/c79ac6b5-b99f-4864-aae7-6e52b62595b2.pdf
You can read my thoughts about Levi Strauss here:
http://people.stern.nyu.edu/adamodar/New_Home_Page/Valuationofweek/LeviStraussIPO.html
And download the valuation here:
http://www.stern.nyu.edu/~adamodar/pc/blog/LeviStraussIPO.xlsx
And, if you want, try your hand and enter the numbers here:
https://docs.google.com/spreadsheets/d/1jjeK0M0-W5RqrEKclEl-vaeXZC8XjiErDSKy09tsnHY/edit?usp=sharing
As someone who wears Levis 501s half the days of the year, I wear my biases openly. 

Attachment: Post class test and solution

4/11/19 I know that you just got your quiz back last week. So, I would not blame you for putting the big project on the back burner. Assuming that you have done your DCF, and perhaps even sent it to me and received feedback, you can, if you have time, complete the pricing section of the project. This will require you to get on S&P Capital IQ and downloading raw data on your company and the peer group (and you will have to make judgments on what to include in this peer group). You can then go through the pricing exercise, standardizing prices (with multiples), controlling for differences in risk, growth or whatever else the market seems to be pricing in and makinga pricing judgment on your company. Don’t be surprised if you get a pricing judgment (that your company is cheap or expensive) that contradicts your DCF conclusion. You will have to pick but there is no better illustration of the difference between value and price than doing both a DCF and relative valuation.
4/12/19 If you have trying your hand at the pricing part of your project, you probably also are recognizing that this is an exercise in working with data sets. I have put up a webcast that is more statistics than finance about how to look at data and try to evaluate relationships between variables. I use the banking sector to illustrate my case but I hope that you find it useful for both your  project.  If you are solid on your statistics, you can skip this webcast, since you already know everything that I am saying. If you need a quick review of the process, I think it will be useful.
Start with the webcast:
http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/multipleanalysis.mp4
Download the slides:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/multipleanalysis/multipleanalysis.pdf
Here is the raw data:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/multipleanalysis/banks2013rawdata.xlsx
And the descriptive statistics:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/multipleanalysis/bankdescriptives.xls
4/13/19 It is Saturday and time for your next newsletter, which is attached. We are now into packet 2 of the lecture notes and you can either buy it at the bookstore (packet 3 is also in the same packet) or print it off. Finally, as you know, the Uber prospectus has been filed. It may be next week’s valuation of the week, but rather than wait for me, you can always preempt me and take my Lyft valuation and make it into an Uber valuation. 
4/14/19

In the week to come, we will complete our discussion of pricing and move on to valuing a company in pieces (or disaggregated valuation as I will call it), first by doing a sum of the parts valuation and then a user-based valuation. On Wednesday, we will turn our attention to valuing private companies. I have attached the solution to last week’s pricing weekly challenge.

Attachment: Weekly challenge solution

4/15/19
In today's class, we closed the book on relative valuation by  looking at how to pick the "right" multiple for a valuation, with the answers ranging from cynically picking one that best fits your agenda to picking one that reflects what managers in that business care about.  It is amazing how widespread relative valuation is. I found this link recently on rules of thumb in valuation. Take a look at it.... especially the multiples mentioned
We then moved on to asset based valuation: liquidation valuation, accounting valuation and sum of the parts valuation. Specifically, we focused on when it makes sense to value a company by valuing its assets and what pitfalls to avoid. If you are interested in a more extensive assessment of companies like United Technologies, you may find this reading useful:
Finally, I know that the next quiz is a week from today, and I also know that it is Passover and that some of you will be spending time with family. If you are observing a religious holiday, you have the option of taking the third quiz a week later with my MBA valuation class. It covers exactly the same material, though the quiz will be different. Let me know if you plan to join in. 

Attachments: Post class test and solution

4/16/19
As promised, this week’s valuation of the week is of Uber and I hope that you give it a shot. You should start with the prospectus (which is really long and a little confusing):
https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm 
Then, you can read my blog post on Uber (but don’t let my story become your story)
https://aswathdamodaran.blogspot.com/2019/04/ubers-coming-out-party-personal.html
Then you can look at both the top down and bottom up valuations that I have of Uber:
1. Top Down: https://www.stern.nyu.edu/~adamodar/pc/blog/UberIPO2019.xlsx
2. Rider-based: http://www.stern.nyu.edu/~adamodar/pc/blog/UberUserIPO2019.xlsx.xlsx 
Finally, I price Uber based upon Lyft’s pricing:
http://www.stern.nyu.edu/~adamodar/pc/blog/UberPricingIPO.xlsx
Once you have your story for Uber’s value, please enter your numbers in the Google shared spreadsheet:
https://docs.google.com/spreadsheets/d/15EkFpxNT6viufG8HvQnb84-vngbSKLaWHWcoGhO44DI/edit?usp=sharing
4/17/19
In today’s class, we looked at valuing private companies, starting by listing the key differences between public and private companies in information available. We then talked about why motive matters in private company valuation, and why the value attached to a private business can be very different for a private (undiversified) buyer, as opposed to a diversified investor. We also talked about adjusting cash flows for owner salaries and key person discounts. Finally, we examine the consequences of illiquidity for pricing/valuing private businesses, and looked at approaches to estimating an illiquidity discount.  The third quiz is scheduled for Monday. As with the previous classes, the quiz will be in two rooms, with the following seating arrangement:
If your last name begins with Go to
A-I, T-Z Paulson
J - S KMEC 2-60
Finally, I am attaching the post class test and solution for toady, as well as two short weekly challenges for the week. 

Attachment: Post class test and solution

4/18/19 I know that you are probably busy preparing for your next quiz, but I will nag you about your final project nevertheless. If you have your DCF done, and most of you hopefully have, it is time to price your company. Go through the process that we went through in class of choosing comparable firms, finding a multiple that works and then controlling for differences (statistically or otherwise). Along the way, don’t forget that pricing is a pragmatic game. If it works, use it. To give you a sense of pricing, I I suggest that you read this excerpt that I found in a guide for appraisers trying to value a hotel on how to do it.
Another valuation rule-of-thumb used in the lodging industry is that each room of a hotel is worth 100,000 times the price of a Coke™ in the on-floor vending machine or in-room mini-bar. More formally:
Value = Coke™ price x Number of Rooms x 100,000
The Edgemore Hotel sells cans of soda for $1.50 in the room mini-bars. Thus, the value of the Edgemore by this “precise" valuation method is:
$1.50 x 300 x 100,000 = $37,500,000
We urge market participants to use this technique judiciously, as some properties seriously "misprice" soda in relation to property. (Really?)
No. This is not a parody but a real technique. You may find it laughably simplistic, but in pricing, if it works, don’t fight it. 
4/19/19
I decided to skip the valuation tools webcast for this week, since I know you are going to be focused on the third quiz. Here are the details:
1. Quiz date/time: The quiz is scheduled for Monday, April 22, from 3.30-4.45. If you have a religious observance (and only if you do), you have an option to take the quiz the following Monday from 1.30-2.00 pm in KMEC 2-60 with the MBA valuation class.
2. Quiz coverage: The quiz will cover all of pricing, asset based valuation and private company valuation (which is the last 20 slides or so of packet 1, all of packet 2).
3. Quiz seating: To make the seating as fair (Yes. People keep tabs of where they sit), I had to break up the quiz seating. Here is the seating arrangement:
If your last name begins with Go to 
A-I, T-Z Paulson
J - S KMEC 2-60
4. Quiz review: To review for the quiz, you can use the following resources:
4/20/19

It looks like a cloudy day in New York and that it may rain over the weekend (at least that is what my weather app says; I am far, far away). While that may put a crimp on your weekend festivities, the good news is that you may be able to catch up on your project; sorry, but it is my job to nag… The newsletter is attached.

Attachments: Issue 11 (April 20)

4/21/19
Just a reminder that your quiz is tomorrow. If you (and only if you) have a religious observance tomorrow, you can take the quiz a week from tomorrow, but let me know before you decide to do so and the nature of your religious overlap with the quiz. I have only a limited number of slots in the MBA class and cannot have too many spill overs. We will also be starting on packet 3 tomorrow in class, if you have not printed it off yet:
http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/valpacket3spr19.pdf (The powerpoint version is on the webcast page)
If you bought packet 2 in the bookstore, it already includes packet 3.
4/23/19

Your quizzes are done and are ready to be picked up in the usual spot. (If you don’t know where that is by now, you probably are not going to pick them up anyway!). I have attached the solutions and the distribution. 

Attachments: Solution (a or b) and distribution of grades

4/24/19
In today's class, we turned our attention to the option to delay, an option that can make the rights to bad project/technology valuable. We used it as a lever to talk about valuing patents and natural resource reserves as options, with significant caveats on both. After the quiz on Monday, we will continue with this discussion of real options.  I mentioned a paper I have on real options. If you are interested, you can find it here:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1295849
I have attached the post class test and solution.

Attached: Post class test and solution

4/25/19 My weekly project nag is due. I would strongly recommend that you finish your pricing this week for your company. That will require that you pick a multiple and find comparable firms (and Capital IQ is your friend). In making those choices, remember to let the data guide you and to use statistics. Thus, you can (but you don’t have to run regressions). If the regressions enable you a price your company better, use them. If not, do not. In other words, this is an exercise in being pragmatic and coming to a pricing judgment, not checking off boxes that you think I want you to do. If you can, do review what I did with Severstal in my valuation of the week this week. It may give you some pointers. 
4/26/19
If you feel like exploring valuing a patent as an option, I have a webcast on how to do it and here are the links:
Webcast: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/optiontodelay.mp4
Presentation: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/optiontodelay/optiontodelay.pdf
Spreadsheet: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/optiontodelay/productoption.xls
I have also added a weekly challenge related to options that you can try out. It is attached.

Attached: Weekly Challenge

4/27/19

In parallel with the Game of Thrones, this class is now into its last season of newsletters, nagging emails and final goodbyes. The second to last newsletter is attached, the nagging will build to a crescendo and lead characters will die (not really, but you really need this for the suspense). 

Attached: Issue 12 (April 27)

4/28/19 In class, this week, we will continue and complete our discussion of real options. It s also a good time to see if you can use your calculator and solve the Black Schole model on it. It is also a really good time to catch up on the pricing of your company and meet as a group to talk about the logistics of making the project report a done deal by May 13.
5/1/19

In this session, we completed our discussion of real options by looking at how to apply the technique to valuing troubled companies. Watch for this week’s tools webcast, where I try to apply this to a real company. We then started on acquisitions, their sorry history and explanations that are embedded in the process. We then started on testing for standard mistakes in acquisitions. That discussion will continue next week.

Attachments: Post class test and solution

5/2/19
If you have not started the project yet, please do. If you have already completed, kudos. If you are in the middle, here is the to-do list , just to keep you organized.

1. DCF Valuation
1.1. Consider feedback you got on your original DCF valuation and respond, but only if you want to.
1.2. Update macro numbers - riskfree rate to today's rate and equity risk premium
1.3. Update company financials. If a new quarterly report has come out, compute new trailing 12-month numbers
1.4. Review your final valuation for consistency

2. Relative valuation
2.1. Collect a list of comparable firms (stick with the sector and don't be too selective. You will get a chance to control for differences later) and raw data on firms (market cap, EV, earnings, revenues, risk measures, expected growth)
(You can this data from Bloomberg or Cap IQ. The latter is a little more user friendly)
2.2. Pick a multiple to use. There may be an interative process, where you use the regression results from 2.4 to make a better choice here)
2.3. Compare your company's pricing (based on a multiple) to the average and median for the sector. Make a relative valuation judgment based upon entirely subjective analysis.
2.4. Run a regression across the sector companies. (Be careful with how many independent variables you use. As a rule of thumb, you can add one more independent variable for every 10 observations. Thus, if you have only 22 firms in your list, stick with only two.)
2.5. Use the regression to make a judgment on your company and whether it is under or over valued. (If you are using an EV multiple, estimate the relative value per share. This will require adding cash and subtracting out debt from EV to get to equity value and then dividing by the number of shares)
2.6. Use the market regression on my website to estimate the value per share for your firm. You can find the regressions here:

3. Option valuation (tomorrow’s class)
3.1. Check to see if your company qualifies for an option pricing model. It will have to be a money losing company with significant debt obligations (a market debt to capital ratio that exceeds 50%).
3.2. If yes, do the following:
3.2.1: Use your DCF value for the operating assets of the firm (not the equity value) as the S in the option pricing model
3.2.2: Use the book value of debt (not the market value) as the K in the option pricing model
3.2.3: Check your 10K for a footnote that specifies when your debt comes due. Use a weighted-maturity, with the weights reflecting the debt due each year. (You don't have to worry about duration)
3.2.4: Estimate the variance in firm value, using your own estimates or the industry averages that I have estimated and are built into the linked spreadsheet.
3.2.5: The value of equity that you get from this model is your option pricing estimate of value for equity.
I have attached an excel spreadsheet that should help in this effort.


4. Bringing it all together
4.1: Line up your intrinsic value per share (from the DCF model), the relative value per share (from the sector), the relative value per share (from the market regression) and the option based value per share (if it applies)
4.2: Compare to the market price in May 2019  (the date will depend on when you get done)
4.3: Make your recommendation (buy, sell or hold)

5. Numbers to me!!!!
Fill in the attached excel spreadsheet when you have all the numbers for all of the people in your group and please get it to me by the evening of May 12, 2019 (If you have someone who is holding up the group, just send me the rest of the numbers). Please do not modify the spreadsheet in any way.




6. Final Project write up
Write up your findings in a group report and submit as a pdf file. The report should be brief and need not include the gory details of your DCF valuation. Just provide the basic conclusions, perhaps the key assumptions that you used in each phase of valuation. There should be relatively little group work. So, you may not really need to get together for much more than basic organization of the report. The group report is due electronically by Monday, May 13, at 5 pm. A pdf format works best. You do not need to attach the raw data and excel spreadsheets). I am not a stickler for format but here are good examples of reports from previous semesters online.
Just to keep the over zealous from going over board, I am going to put a page limit of 15 pages for each report (for up to five companies). You can add two extra pages for each additional company to the limit; with 7 companies, the page limit is 19 pages. And no.. you don't have to do everything that these groups did (So, don't spend the next five days converting your DCF valuations into pictures). I just like the fact that the valuations were organized, presented in much the same format and were to the point. Of course, content matters.

7. Celebrate, but remember that your final exam is a few days later.
5/3/19 This is the last of the valuation tools webcasts. If your company is the one that meets the equity-as-option test (losing money, lots of debt), you are probably not happy. However, it is really not an involved exercise. To assist you, I did put up my latest valuation tools webcast, on valuing distressed equity as an option. I used Jet India, an Indian airline with a history of losses and a mega debt load to illustrate the process. You can start with the webcast below:
http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/equityoption.mp4
The financials for Jet India are contained in this sheet:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/DistressedEquity/jetindiaFA.pdf
The DCF valuation that you need to get your option model started is here:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/DistressedEquity/jetindiaDCF.xls
The value of Jet India's equity as an option is contained in this spreadsheet:
http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/webcasts/DistressedEquity/jetindiaoption.xls
It is pretty straight forward and may be useful. 

On to the final exam. Your final is officially scheduled for May 17 from 2.00-3.50 and as with the quizzes, the seating will be spread between Paulson and other classrooms. Some of you have reached out about the possibility of an early final, and I will be offering those of you who want to take this option the opportunity to  take the final on May 14 from 10 am - 12 pm. Since this is the day after your final project is due, you will not get much time to prepare, but if you really have to take the exam early, you can use this one. I have set up a Google shared spreadsheet for you to sign up for the early exam, and since it will also offered to my MBA class, please specific which class you are in, when you sign up.,
https://docs.google.com/spreadsheets/d/1BATeS0n7FQZ0Pwlb8jxybSVH9cjpeekLYPtSo5jcKhg/edit?usp=sharing 
5/4/19 I hope that your weekend is going well, though I have probably ruined much of it. As you work through the relative valuation section, a few questions that seem to be recurring:
1. Variables to control for: If you look at your notes on pricing, we started every regression discussion with an intrinsic value equation (using the dividend discount model or FCFF model). Don’t try to plug numbers into this equation to do your pricing. It is pointless since it will only give you a dividend discount model or FCFF value (i.e.., an intrinsic value). The only reason that I start with this equation is to get a measure of what variables drive a multiple, so that I can control for difference when I do my pricing. Thus, after finding that PBV is determined by ROE, payout, growth and cost of equity, I know that I need to control for one or more of these variables when I compare the PBV ratio for my company against the peer group. As to how you control for these difference, I leave the choice to you. I like regressions, simply because they allow me to see what the data tells me. When running the regression, I can use proxies for each of the variables (I can use any measure of risk, not just beta, as my proxy for risk).
2. Sample size: There is a trade off between sample size and finding companies that look more like yours. If you are doing a subjective comparison - comparing your company's PE with the PE ratio of comparables, controlling for differences with a story, you want a small sample of companies that look like yours. If you are doing a regression, you should try to get a larger sample, even if it means bringing in firms that may not look like yours. You can control for differences in the regression. If you can get your sample size up to 20-25, you should be okay. And one more thing. Don't fight the data. If a regression does not work, it does not. Remember that you get to make the ultimate judgment and you can decide that given your company and its peers, the best estimate of relative value is just the average PE for the sector.
3. Market regressions: The updated market regressions from the start of 2019 are on my website under updated data. Look to the bottom of the page (and at the first link in the first column, not the archives). Here is the direct link 
http://www.stern.nyu.edu/~adamodar/New_Home_Page/datafile/MReg19.html
4. Young or money losing companies: Running these regressions with young companies is always tricky. The first is that if you use current data, the only multiple that you have any shot at using is a revenue multiple. Nothing that you can do about that. You can try to use forward numbers to do relative valuation. What does that mean? You can go into your DCF, find your revenues or earnings in year 10, and use the fundamentals at that point to get a multiple for your company. Remember, though, that this a value in the future and you still have to discount it back and deal with survival risk.
Finally, the last newsletter is attached. 

Attachment: Issue 13 (May 4)

5/5/19

Tomorrow, we will continue with our discussion of  the many sins in acquisition valuation and as a precursor, I have attached a series of questions that cut to the heart of acquisition valuation and will form the backbone for tomorrow’s class. It is a great way to review the entire class while also getting ready for tomorrow’s class. While we answered a few of these questions in the last class, we will continue down the list in class. So, please give it your best shot. On Wednesday, we will turn our attention to the last part of this class, where we will go inside companies and look at the levers to increase value. For those of you who will be in consulting, strategy or running your own businesses, you will get to see what drives value up (or down).  

Attachment: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/acqtests.pdf

5/6/19
I am sorry if you found today's session to be a downer. Don't get me wrong. Acquisitions are exciting and fun to be part of but they are not great value creators and in today's sessions, I tried to look at some of the reasons. While the mechanical reasons, using the wrong discount rate or valuing synergy & control right, are relatively easy to fix, the underlying problems of hubris, ego and over confidence are much more difficult to navigate. There are ways to succeed, though, and that is to go where the odds are best: small targets, preferably privately held or subsidiaries of public companies, with cost cutting as your primary synergy benefit. If you get a chance, take a look at a big M&A deal and see if you can break it down into its components.  I did get briefly into the InBev/SABMiller merger in class but if you want something more extensive, I am going to offer you the blog post that I did on it when it happened:
If you look towards the bottom on the post, you will see a YouTube video on the merger.

Attachments: Post class test and solution

5/8/19
As we get closer to the end game here, I thought I would update you on the final exam details:
1. When? The regular final exam is scheduled for May 17. There will be an early version on May 14, from 10-12.  You can sign up on this Google shared spreadsheet:
https://docs.google.com/spreadsheets/d/1BATeS0n7FQZ0Pwlb8jxybSVH9cjpeekLYPtSo5jcKhg/edit?usp=sharing
For those of you who were shut out, I have opened a few more slots.

2. What will it cover? It is comprehensive and will cover everything in the class from intrinsic valuation to pricing to real options. That said, the material is interrelated. So, it is not as bad as it sounds. Like the quizzes, it will be open book, open notes.

3. Review session
The review session for the webcast is below, with the slides at the second link
Webcast: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/valfinalreview.mp4 
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/valfinalreview.mp4 
You can also find past final exams and solutions at this link:
Past finals: http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/finals.pdf 
Past solutions; http://www.stern.nyu.edu/~adamodar/pdfiles/eqexams/finals.xlsx
I hope these help.
5/10/19
As you embark on the closing touches of the project, here are a few things to keep in mind:
1. Tweak your DCF, if you need to, estimate a value and let it go. This is an ongoing story and this your take, as of right now.
2. Do the pricing of your company, recognizing that your final pricing conclusions are going to be a function of the multiple you use, the companies you use as comparable firms and how you control for differences. If your R-squared is low, try alternatives, but at some point, adopt the karmic pose. It is what it is.
3. Make your recommendation and I will accept your judgment.

I know that this is shaping up as the weekend from hell for some of you and I share some (or all) of the blame. Anyway, it is too late for me to be offering you "substantive" help on the project, at least on a collective basis, but here is a list of "to dos" for you and me over the weekend:
For you:
1. Finish the number crunching for the project. 
2. Fill in the attached summary sheet with the numbers and get them in to me in an email. In the subject heading, please list “The Endgame”.

3. Work on writing up the project report. Don't get fixated on format or on small details. 
  1. There is one report, per group, that will contain summary descriptions of your valuation, pricing and recommendation for each of the companies that you covered. 
  2. There is absolutely no need for excel files to be added on. 
  3. No matter what format you use for the project (Word or Powerpoint), please convert into a pdf file. There is less chance of bad formatting issues with pdf lies.
  4. Make sure that you include the names of all the group members, in alphabetical order, on the first page of the report.
4. On Monday morning, around 1 pm, check your email. You should find a presentation (see my tasks below) for the class attached to the email.
5. Come to class on Monday. I know that some of you have not been in class the last couple of weeks and I understand that there are finals and projects due in other classes. However, Monday's class is special. If this were a play, it would be when the fat lady sings. While I may not be fat, a lady or hold a tune, I will do my best impersonation.
6. Turn in your project report by email by 5 pm, as an attachment. Make sure that you cc everyone in your group and In the subject, please list “Its Over".

For me:
1. Send nagging emails every few hours asking for your summaries and providing updates.
2. Pull your summaries together in a master spreadsheet.
3. On Sunday night, do assorted magic on the summaries
4. Put into a final presentation (see above) and send to you by Monday morning at 10 am
5. Show up in class and do the "fat lady song"
6. Wait for your final project reports
7. Start grading…
5/12/19
I hope that you remembered you remembered that today is mother’s day.
Summaries received: 104
Yet to come: 196
Thank you. 
5/13/19
Thank you for sending in your summaries. I have attached the presentation for the class and I hope to see you all there (including those of you who usually prefer to take it online). 
On a different note, for those of you who will be taking the exam tomorrow from 10-12, the venue will be Paulson Auditorium. The review session and slides are below:
Review session: http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/valfinalreview.mp4 
Slides: http://www.stern.nyu.edu/~adamodar/pptfiles/val3E/valfinalreview.pptx
5/15/19
I know that it must be a relief to have completed the projects. I am just starting the grading and the projects are being returned in the order in which I received them. You should receive a pdf file with the comments embedded in them, with the grade on the first page and it is out of 40 points. Now, on to the final exam. It is scheduled for Friday, May 17 from 2 pm - 3.50 pm. As with the quizzes, I have KMEC 2-60 for the final, and here is the seating set up:
If your last name begins with Go to
A -P Paulson
Q -Z KMEC 2-60
The exam, like the quizzes, will be open book and open notes. 
5/19/19

The finals are done and can be picked up in the usual spot. I have attached the solution and a distribution of scores for the final exam. You will notice that there are no grades on the distribution. That is because the final grades should be up shortly. I will let you know as soon as they are done. 

Attachments: final exa

5/23/19
I hope you are done and are out celebrating. However, just in case you still care about grades, I submitted yours and they should be online. I want to to wish you the very best with whatever you plan to do with your lives. If you are graduating, I hope your "job" brings you as much joy as mine has to me. If you enjoy what you are doing, you will never have to work a day in your life. Well, at least, I have not. You have my email address for life and you can bounce off any questions, queries or issues that you have with corporate finance, valuation or the most valuable sports franchises in the world (the answer to the last is always the "Yankees").  And just in case, you need a valuation fix... here are some links:
Twitter feed: @AswathDamodaran (Do your part to advance me to Lady Gaga or at least Kanye West status…)
If you have any questions about your grade, use the attached spreadsheet to see where you ended up. You do need to know your final exam grade to be able to use it. For the last time (in this class, at least)!

Attachments: Grade checker