Practice: Intrinsic Value
Seventeen scored problems on present value, the cost of capital, and discounted cash flow, ending with a three-case valuation of one fictional company and a margin of safety.
What you'll do
This set values Pine Ridge Cycles from its cash flows. You'll warm up with present and future values, build a cost of equity and a weighted average cost of capital, put the steps of a DCF in order, calculate a terminal value and see how much one point of growth moves it, then use the DCF tool for bear, base, and bull cases, weight them, and set a price with a margin of safety. The last questions ask why this answer disagrees with the multiples in the previous set. Your score appears as you go, and nothing here is a recommendation.
This draws on
Check each answer once you've committed to it: the score counts your first try. A calculator helps for the first half, and the tool does the arithmetic in the second. Every number is hypothetical.
The problems in this practice set are for members
Inside, each with a worked answer: Money through time (3 problems); The discount rate (3 problems); The method (3 problems); Valuing Pine Ridge Cycles (5 problems); What it means (3 problems).
Membership opens every lesson in the curriculum, the capstone projects, the interactive tools, and the members-only channels in the Hyperion Entities Discord. The first lesson of every module stays free.