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AJohn2023Fundamental Drivers of a Company’s ValueValue DriversCFAII_SS18:John Weighted average cost of capitalCFAII_SS18:(affectcapitalorcapital Asset turnover ratios(affectsoperatingefficiencyorFCF)167。 Sales growthassumptionstoof2023Sensitivity analysis? ExamineJohn Terminal ValueT=FCFT+1/(WACCg)FCF1 FCF2 … FCFT1 FCFT T1FCF = Free cash flowWACC = Weighted Average Cost of CapitalTV = Terminal Value (at time T) = FCFT+1/(WACC – g), where g is the longterm growth rate in salesT = Length of the forecast horizon (typically, 7 to 10 years)CFAII_SS18:Wei,Options 52 byand(bothofalldistribution availablebeenneedsallremainingfromcashare:167。cashWei,Options 51 by Timing167。(FCF)167。cashfutureofDiscountedoperations2023Discounted Cash Flow Model? 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