Financing Policy for a constant Free Cash Flows growth

In Part I of this toolkit on valuation we showed that three commonly applied valuation methods, the Adjusted Present Value, the WACC and the Cash Flow to Equity method, are consistent with each other provided that the cost-of-capitals are applied consistently.

Image: © Nationale Beeldbank

In this Part III we show how the three methods need to be adjusted when the firm is growing - and that also with growht they consistently yield the same value.

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A Practitioners Toolkit on Valuation, Part III: Discount Rates and Financing Policy when Excepted Free Cash Flows have Constant Growth, Frans de Roon and Joy van de Veer (2015)