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Valuation is a complex art that requires a deep understanding of financial modeling and various influencing factors. One critical aspect is determining the appropriate growth rate for the perpetual growth phase in a Discounted Cash Flow (DCF) model. Take the example of Tesla, which revolutionized the electric vehicle industry.
The Role of FinancialAnalysis in Vertical Mergers Financialanalysis underpins the decision-making process, involving: Financial Modeling: Creating models to forecast the financial performance of the merged entity.
Adjustments for Negative Cash Flows: Incorporate adjustments in the DCFanalysis to account for the negative cash flows in the initial years. Adjust the risk-free rate, such as the yield on government bonds, to account for the risk associated with the company's cash flow projections and future performance.
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