Advanced cashflow valuations

In this lesson

1. 0:00 Advanced cashflow valuations overview
2. 1:46 Cash flow to equity technique explained
3. 2:28 Impact of taxation on valuations
4. 3:00 Withholding tax and double tax treaties
5. 5:11 Worked example: Geico and A Inc
6. 8:34 No double tax agreement scenario
7. 9:39 Foreign exchange in NPV calculations
8. 11:42 Key takeaways and summary

About this lesson

correctly adjusted for real-world scenarios. You'll work through practical examples that demonstrate when to apply each technique and how international tax rules affect the equity value you calculate. Essential for AFM and SBL exam success when tackling cross-border valuations. The session starts with a brief recap of the two core valuation methods: cash flow to all investors (discounted at WACC) and cash flow to equity (discounted at cost of equity). From there, you'll explore how taxation impacts your calculations throughout, including withholding tax imposed by overseas governments on foreign shareholders and double tax treaties that prevent you paying tax twice on the same income. A worked example shows you how to calculate net remittances when both rules apply, revealing the material difference between scenarios with and without treaty protection. The final section covers foreign exchange handling in NPV calculations. You'll learn why consistency matters—converting all cash flows into your home currency and labelling every figure clearly. The lesson also explains how interest rate parity and purchase power parity theory help forecast future exchange rates when your valuation spans multiple years, ensuring your discount rates and cash flows align with realistic currency movements. This practical knowledge prepares you for real exam questions where overseas investments and multi-currency scenarios test your ability to apply valuation techniques accurately under pressure.

Duration: 13m