Publication number: ELQ-32847-1
View all versions & Certificate
FCFE (Free Cash Flow to Equity) Valuation Model
A complete FCFE valuation model that allows you to capital R&D and deal with options in the context of a valuation model
Prof. Aswath Damodaran offers you this business tool for free!
download for free
Add to bookmarks
The objective of this model is to get the following output values for a firm:
- Present Value of FCFEs in high growth phase
- Present Value of Terminal Equity Value
- Value of equity in operating assets
- Value of cash and marketable securities
- Value of equity in firm
- Value per share
How it works:
The expected dividends are estimated for the high growth period, using the payout
ratio for the high growth period and the expected growth rate in earnings per share.
The expected growth rate is estimated either using fundamentals:
Expected growth = Retention Ratio * Return on Equity
Alternatively, you can input the expected growth rate.
At the end of the high growth phase, the expected terminal price is estimated using
dividends per share one year after the high growth period, using the growth rate
in stable growth, the payout ratio in stable growth and the cost of equity in stable
The dividends per share and the terminal price are discounted back to the present at
the cost of equity changes.
If your cost of equity in stable growth is different from your cost of equity in high
growth, the cost of equity in the second half of the stable growth period will be
adjusted gradually from the high growth cost of equity to a stable growth cost of
1. Length of high growth period
2. Expected growth rate in earnings during the high growth period.
3. Dividend payout ratio during the high growth period.
4. Expected growth rate in earnings during the stable growth period.
5. Expected payout ratio during the stable growth period.
6. Current Earnings per share
7. Inputs for the Cost of Equity
People using this tool also downloaded
Merger & LBO Model Valuation ExcelThis LBO model in excel analyzes the value of equity and the firm in a leveraged buyout operation.8,018
Capital Budgeting Analysis Excel ModelThis Excel Model allows you to do a basic capital budgeting analysis for a project, and compute NPV, IRR and ROI11,016
Valuation: Free Cash Flow to Firm (FCFF) vs Free Cash flow to Equity (FCFE) Excel ModelExcel Valuation model that reconciles FCFF (Free Cash Flow to the Firm) and FCFE (Free Cash Flow to Equity)5,754
Cash Flow Return on Investment (CFROI) for a Firm Excel ModelThis Excel model calculates CFROI (Cash Flow Return on Investment).8,185
Merger Synergy Valuation Excel ModelThis Excel Model estimates the value of synergy in a merger.1,969
Free Cash Flow for the Firm (FCFF) Valuation Excel ModelAn Excel Model to value firms with operating income that is either positive or can be normalized to be positive.1,355
Dividend Discount ModelA complete dividend discount model that can do stable growth, 2-stage or 3-stage valuation.2,145
Economic Value Added (EVA) vs Cost of Capital Discounted Cash Flow (DCF) Valuation Excel ModelExcel Tool for reconciling EVA (Economic Value Added) and DCF (Discounted Cash Flow) valuation models1,743
Valuation of an Income Generating Property - Excel ModelThis Excel Valuation Model can be used to value property generating income.963
Discounted Cash Flow (DCF) Excel ModelThis DCF Excel Model provides a rough guide to which discounted cash flow model may be best suited to your firm.1,364
IPO Valuation Excel Model - SpotifyA comprehensive overview of Spotify's financial performance and analysis of its IPO1,794
Value of Control in a Firm - Excel ModelThis Excel model analyzes the value of control in a firm.1,273
Any questions on FCFE (Free Cash Flow To Equity) Valuation Model?
The user community and author are here to help. Go ahead!