DCF FIRM VALUATION PROJECT

DCF Firm Valuation Project



DCF Firm Valuation Project

WACC

Berkeley United would have to choose which of the above three alternatives would be the best capital cost of budgeting for his organization. Of the three the current 6.2% WACC would be considered the best alternative for Guillermo Furniture as compared to the hi-alternative, which is 10.1% and the broker, which is 7.3%.

The financial statements play an important role in any organization. It determines the financial status of the organization and whether the organization should continue with business as normal or choose an alternative business plan. All organizations should have a backup plan in the event of competitors or an economic downfall that may occur. Berkeley United must create a strategic business plan to stay in business and compete with the new organization that has entered the market (William, 2010). Berkeley United is valued by its expected cash flows or its required rate of returns on those cash flows. Estimating the cost of capital and value in regard to assets are influenced by financing and investment decisions.

Factors affecting risk

To find the best option, there are various options that can be used from capital budgeting techniques; including: simple payback, discounted payback, and net present value. In the Simple payback capital budgeting technique refers to the amount of time it will take Berkeley United to recover his original investment. Therefore, the payback method may result in a bias towards accepting short-term projects and rejecting long-term investments. The payback method ignores the timing of cash flows within the payback period. Finally, the payback method ignores the riskiness of future cash flows. The discounted payback is the amount of time it takes for the project's discounted cash flows to equal the project's initial cost.

Berkeley United Depreciation and DCF Valuation

This method involves breaking down ...