Question

What does he mean by Expected Cash Flows?

Before answering these questions please watch the 3 Damodaran Videos and answer the following question. Intrinsic Valuation

Answer 1

Expected Cash flows

This is the cashflow an investor or investing company expected to realize from the project before that project begin. Normally Investors choosing average of free cashflows as expected cashflows.

Free cash flow = Cash flow from Operating activities - Invsetments in Property plant and Equipments.

Intrinsic Value

Intrinsic Value is the anticipated or calculated value of a company, stock, currency or product determined through fundamental analysis. it includes tangible and intangible factors. it is the real value of the stock.

Intrinsic Value = (FCFE1/(1+r)^1)+(FCFE2/(1+r)^2)+(FCFE3/(1+r)^3)++..........+(Terminal Value/(1+r)^n)