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What is the Net Asset Method (NAV) of Share Valuation? The Net Asset Method (NAV) of share valuation is an asset-basedapproach used to determine a company’s value by subtracting total liabilities from total assets. Revaluing inventory based on realizable value.
There are three primary approaches under which most valuation methods sit, which include the income approach, market approach, and asset-basedapproach. The income approach estimates valuebased on future earnings, using techniques like the discounted cash flow analysis.
Market-based methods like Comparable Companies Analysis and Precedent Transactions Analysis offer relative measures of valuebased on market data. Income-based methods such as Discounted Cash Flow analysis focus on future cash flows to determine value.
It considers the company’s cost of equity, cost of debt, and capital structure. c) Calculating Present Value: The projected cash flows are then discounted to their present value using the discount rate. The present values of all projected cash flows are summed to determine the company’s intrinsic value.
It considers the company’s cost of equity, cost of debt, and capital structure. c) Calculating Present Value: The projected cash flows are then discounted to their present value using the discount rate. The present values of all projected cash flows are summed to determine the company’s intrinsic value.
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