Firm valuation|
roper Industries Inc.|
(NYSE:ROP) Technical Report|
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This exercise represent an attempt at evaluating the value of the firm Roper Industries Inc. As many stocks earn experienced important market corrections during this past fewer months, well reckon the true value of the firm by delimit its main constituents. It is important to keep in mind that this rating is conducted in November 2009, where there is still many troubled indicators in the market following the turmoil that we knew last year. The current paygrade might then be very temporary as well as the assumptions make in the document. This document address the assumptions made while building the excel spreadsheet ROP - Spreadsheet.xlsx, and this file should be read with the current document to understand the different computations. The essay allow then conclude by an analysis of the results.
Valuation Technique
The valuation technique used in this exercise is the Discounted exchange Flow (DCF). This technique leave alone give us an estimate of the true value of Roper Industries based on the rising cash flows of the company and a consistent cost of capital.
As we face a firm founded in the late 1800s, listed on the New York Stock Exchange since 1992 and with relatively stable results during the front exercises, the method should generate proper valuation in regards of the assumptions made to estimate the different parameters presented here.
Cost of capital
As Roper Industries uses a mix of equity and debt to finance its acitivities, the cost of capital will be calculated as a weighted intermediate of the various sources of funding. No cost of preferred stock will be calculated as it is not used by the firm.
Risk- chuck up the sponge rate
The first element that we need to evaluate in order to calculate the cost of capital is the risk free rate. To do so, well need a rate representative of the top executive of the firm to reinvest at this rate in the future....If you want to encounter a full essay, order it on our website: Orderessay
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