Program



Valuation: Inputs 
This file describes the programs in this section and provides some insights into their usage.  
This spreadsheet calculates the implied risk premium in a market. This can be used in discounted cashflow valuation to do market neutral valuation.  
wacccalc.xls  This spreadsheet allows you to estimate the cost of capital for your firm.  
This program summarizes the three approaches that can be used to estimate the net capital expenditures for a firm, when it reaches stable growth.  
This program converts operating lease expenses into financing expenses and restates operating income and debt outstanding.  
This program converts R& D expenses from operating to capital expenses, estimates a value for the research asset and restates operating income.  
This spreadsheet calculates the implied risk premium in a market. This can be used in discounted cashflow valuation to do market neutral valuation.  
Allinone Valuation Models  This program provides a rough guide to which discounted cash flow model may be best suited to your firm.  
This spreadsheet can be used to value toughtovalue firms, with negative earnings, high growth in revenues and few comparables. If you have a dot.com firm, this is your best choice.  
A complete dividend discount model that can do stable growth, 2stage or 3stage valuation. This is your best choice if you are analyzing financial service firms.  
fcfeginzu.xls  A complete FCFE valuation model that allows you to capital R&D and deal with options in the context of a valuation model.  
This model tries to do it all, with all of the associated risks and rewards. I hate having to work with a dozen spreadsheets to value a firm, and I have tried to put them all into one spreadsheet  a ratings estimator, an earnings normalizer, an R&D converter, an operating lease converter, a bottomup beta estimator and industry averages. Try it out and make your own additions.  
Focused Valuation Models  Stable growth, dividend discount model; best suited for firms growing at the same rate as the economy and paying residual cash as dividends.  
Twostage DDM; best suited for firms paying residual cash in dividends while having moderate growth.  
Threestage DDM; best suited for firms paying residual cash in dividends, while having high growth.  
Stable growth, FCFE discount model; best suited for firms in stable leverage and growing at the same rate as the economy.  
Twostage FCFE discount model; best suited for firms with stable leverage and having moderate growth.  
Threestage FCFE discount model; best suited for firms with stable leverage and having high growth.  
Stable growth FCFF discount model; best suited for firms growing at the same rate as the economy.  
Twostage FCFF discount model; best suited for firms with shifting leverage and growing at a moderate rate.  
Threestage FCFF discount model; best suited for firms with shifting leverage and high growth.  
Threestage FCFF valuation model, also presented in terms of projected EVA.  
A generalised FCFF model, where the operating margins are allowed to change each year; best suited for firms in transition.  
Financial Service firms  eqexret.xls  Estimates the value of equity in a bank by discounting expected excess returns to equity investors over time and adding them to book value of equity. 
Troubled firms  normearn.xls  Normalizes the earnings for a troubled firm, uising historical or industry averages. 
distress.xls  Estimates the likelihood that a troubled firm will not survive, based upon bond ratings as well as bond prices.  
fcffneg.xls  Generalized FCFF model that allows you to value negative earnings firms as going concerns.  
Private firms  pvtdiscrate.xls  Adjusts the discount rate (cost of equity) for a private firm to reflect the lack of diversification on the part of the owner (or potential buyer) 
liqdisc.xls  Estimates the illiquidity discount that should be applied to a private firm as a function of the firm's size and financial health. Uses both restricted stock approach and bidask spread regression.  
High Growth Firms  revgrowth.xls  Estimates compounded revenue growth rate for a firm, based upon market share and market size assumptions. 
higrowth.xls  This spreadsheet can be used to value toughtovalue firms, with negative earnings, high growth in revenues and few comparables. If you have a young or startup firm, this is your best choice.  
Multiples  This is a model that uses a twostage dividend discount model to estimate the appropriate equity multiples for your firm. It will give you identical answers (in terms of value) as the 2stage DDM model.  
This model uses a 2stage FCFF model to estimate the appropriate firm value multiples for your firm. It will give you identical answers (in terms of value) as the 2stage FCFF model.  
Acquisitions  This program analyzes the value of equity and the firm in a leveraged buyout.  
This program estimates the value of synergy in a merger.  
Other Assets  reval.xls  This spreadsheet allows you to value an incomegenerating property as well as just the equity stake in the property. 
Value Enhancement  valenh.xls  This spreadsheet allows you to make a quick (and dirty) estimate of the effect of restructuring a firm in a discounted cashflow framework. 
fcffeva.xls  This spreadsheet shows the equivalence of the DCF and EVA approaches to valuation.  
This model uses a 2stage FCFF model to estimate the appropriate firm value multiples for your firm. It will give you identical answers (in terms of value) as the 2stage FCFF model.  
Basic Option Pricing Models  bstobin.xls  This spreadsheet converts the standard deviation input in the BlackScholes model to up and down movemenents in the binomial tree. 
This is a dividendadjusted model for valuing shortterm options. It considers the present value of expected dividends during the option life.  
Tnis is a dividendadjusted model for valuing long term options. It considers the expected dividend yield on the underlying asset.  
This is a model for valuing options that result in dilution of the underlying stock. Consequently, it is useful in valuing warrants and management options.  
Real Option Models in Corporate Finance  This model estimates the value of the option to expand in an investment project. Modified, it can also be used to assess the value of strategic options.  
This model estimates the value of the option to delay an investment project.  
This model estimates the value of financial flexibility, i.e, the maintenance of excess debt capacity or backup financing.  
This model estimates the value of the option to abandon a project or investment.  
Real Option Models in Valuation  A model that uses option pricing to value the equity in a firm; best suited for highly levered firms in trouble.  
A model that uses option pricing to value a natural resource company; useful for valuing oil or mining companies.  
A model that uses option pricing to value a product patent or option; useful for valuing the patents that a company might hold. 