Good evening, Sir.
I notice there is FCFE multiplier in Selorne. Could Sir kindly explain the purpose of this multiplier as I do not understand its concept.
I would appreciate it if Sir is willing to allocate your time on explaining this question.
Thanks and stay safe.
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Selorne's FCFE Multiplier
4y ago#1You will have to be specific as to which multiplier you are referring to.
For Chawon we are using the growth formula from the formula sheet because we are discounting a growing perpetuity.
For the total company valuation we are multiplying by 8 because the question specifically states that the share value is a multiple of 8 of the free cash flows (and so is effectively a PE valuation).
I do explain both of these approaches in my free lectures.
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