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Modeling Managers as EPS Maximizers

Reynolds Holding

In business schools, managers are taught to maximize the net present value (NPV) of future cash flows. We can broadly classify firms’ corporate behaviors into two categories: growth and value firms. In the real world, managers consistently ignore this advice.

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Corporate Finance Jobs: Cozy Careers, But Bad “Plan B” Options

Brian DeChesare

Corporate Finance Jobs Definition: In corporate finance, you manage a company’s financial statements, cash, and capital structure, and you forecast and plan its future financial performance, usually on a divisional or regional level for large companies. What Are Corporate Finance Jobs? not banks or investment firms).

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Post Holdings to Acquire Rachael Ray® Nutrish®, Nature's Recipe® and Other Select Pet Food Brands from The J.M. Smucker Co.

Benzinga

Additionally, Post expects the transaction to result in a tax benefit to Post with a net present value of approximately $120 million. One-time costs to achieve synergies are estimated to be approximately $75 million.

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Discount Rate—Explanation, Definition and Examples

Valutico

Weighted Average Cost of Capital (WACC): WACC is the average rate of return a company is expected to provide to all its investors, including equity and debt holders. It is calculated by weighting the cost of equity and cost of debt based on their proportions in the capital structure.

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Moonshots

Reynolds Holding

Managers who anticipate these agency problems won’t invest in a moonshot even if they believe it has a positive net present value. But managers can’t properly motivate the employees by rewarding them with the company’s stock, because its price wouldn’t track the value of the moonshot alone.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

This value is widely referred to as the “Net Present Value” (NPV). . which produces a Net Present Value of the Terminal Value of: $74 million. . So the Terminal Value here is three times as large! Often, the Weighted Average Cost of Capital (WACC) is used*. . Does this make sense?

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The Role of Financial Projections in Business Valuation

Equilest

They provide insights into the financial position, capital structure, and overall worth of the business. Balance sheet projections aid in assessing the company's ability to meet its obligations and measure its net worth. These projections are discounted back to their present value using an appropriate discount rate.