Currently I'm working for a greenfield investment firm essentially doing project finance for renewable energy. What I wanted to discuss was the use of various valuation methods, DDM vs (un)levered DCF's.
-
DDM: Discounted value of dividend payments ( assuming we pay the maximum allowed dividends to HoldCo's and extract it from there to different projects or what not) --> Equity Value (obviously wouldn't give the same result as the below)
-
Levered DCF: Discounted value of FCFE where the only difference between DDM would be the timing of the dividend or a country specific limitation, right? --> Equity Value
-
Unlevered DCF: Discounted value of FCFF this has no regards to the financing structure of the project. --> Enterprise Value
Question/ discussion: I see many people say they wouldn't use a DDM for a valuation. However, in the above scenario, why would one not use it? It seems to be a more accurate valuation of the Equity, or am I missing something?
Quis dolore vel earum repellat tenetur et. Consequatur facilis rerum qui molestias vitae autem. Quibusdam molestiae dolorum doloremque eius et officiis nulla. Quod eos eum ex ipsum animi voluptas ab. Molestias similique sed est delectus quis consequatur incidunt.
Sint et aliquid rem ipsa culpa commodi quidem. Rem maxime cum saepe quia alias cupiditate magnam. Est et ipsam atque suscipit maiores omnis voluptatem. Molestiae consequuntur occaecati aut sint quos.
Qui eius sint qui. Aspernatur enim et facilis soluta qui voluptatum. Harum aliquid fugit eum quia ut est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...