Today's class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link: aswathdamodaran.blogspot.com/2014/03/if-it-is-strategic-growth-investment-in.html After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the process for estimating the cost of equity in a valuation. In particular, we broke down risks into different types and argued that only some of these risks belong in discount rates, if investors are diversified. Next session, we will start with a discussion of risk free rate, a foundational number that will drive the rest of our calculations. Start of the class test: www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/kennecott.ppt Slides: (1) www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntroSpr21.pdf (2) www.stern.nyu.edu/~adamodar/podcasts/valUGspr21/session3slides.pdf

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