Corporate Valuation Holthausen Pdf 17 Review

Most standard editions of this book use Chapter 17 to focus on or "Estimating Terminal Value" (depending on the edition). The most common and pedagogically significant chapter is the one on Estimating Terminal Value — a critical component of any discounted cash flow (DCF) valuation.

[ TV_n = \fracFCF_n+1(WACC - g) ]

This formulation forces the analyst to be explicit about the long-term profitability of new investments — a step many practitioners skip, leading to overvaluation. Holthausen and Zmijewski systematically warn against several errors: corporate valuation holthausen pdf 17