📘 How do you value a business two ways?

What you’ll learn

1. What Valuation Is and Why It Is HardExplain what value means, distinguish intrinsic value from price, and identify the major valuation approaches and their assumptions.Valuation is the disciplined estimation of what an asset is worth, grounded in its capacity to generate future cash flows and the risk attached to them. Intrinsic-value approaches (discounted cash flow) and relative approaches (multiples) answer different questions, and every estimate rests on assumptions that introduce bias and uncertainty. A good analyst makes those assumptions explicit, tests them, and treats a valuation as a range and an argument rather than a single 'true' number.
2. The Time Value of Money and Discount RatesApply present-value mathematics and build a risk-adjusted discount rate using CAPM and WACC.Present value translates future cash flows into today's dollars by discounting them at a rate that reflects the time value of money and risk. The cost of equity is commonly estimated with the Capital Asset Pricing Model, and the cost of capital for the whole firm is the weighted average cost of capital (WACC), blending the after-tax cost of debt and the cost of equity by their market weights. Choosing the right discount rate is central because small changes in the rate move the valuation substantially.
3. Building a Discounted Cash Flow ModelConstruct a DCF by forecasting free cash flows, computing terminal value, and reconciling enterprise value to equity value per share.A DCF projects a firm's free cash flows over an explicit forecast horizon, discounts them and a terminal value back to the present, and converts the resulting enterprise value into equity value per share. The two free-cash-flow definitions, FCFF (to the firm, discounted at WACC) and FCFE (to equity, discounted at the cost of equity), must be paired with the matching discount rate to avoid errors. Because terminal value often dominates the result, its growth and rate assumptions deserve special scrutiny.
4. Relative Valuation with MultiplesSelect, compute, and apply valuation multiples to comparable companies and transactions while controlling for differences in fundamentals.Relative valuation prices a company by applying a multiple, such as EV/EBITDA or P/E, observed on truly comparable companies or transactions. Equity multiples value the equity directly while enterprise-value multiples value the whole business, and the two must be used with numerators and denominators that are consistent. Because multiples are quick but easy to misuse, the analyst must define comparables carefully, scrub the inputs, and recognize that differences in growth, risk, and profitability drive differences in fair multiples.
5. Case Study: Valuing a Business Two WaysWork through a structured case that values one company using both DCF and multiples, then reconcile and critique the results.This case applies the course's tools to a single firm, building a DCF and a comparable-multiples estimate and then explaining why they differ. Triangulating across methods exposes the assumptions doing the heavy lifting and forces the analyst to defend a value range rather than a false-precision point. The deliverable is a reasoned recommendation with explicit assumptions, sensitivity analysis, and an honest statement of what could make the conclusion wrong.
6. Capstone: Build and Defend a Mini Valuation ArtifactProduce a concise, well-documented mini valuation of one company and defend it in a peer-style critique.In this capstone you create a mini artifact, a short, fully sourced valuation of a single company using both a DCF and a multiples cross-check, ending in a recommendation and a range. The work is then assessed through peer-style critique, where reviewers stress-test your assumptions, consistency, and reasoning against a shared rubric. The aim is not a 'correct' number but a transparent, internally consistent, and defensible argument about value.

Questions this course answers

Grounded in trusted sources

• Aswath Damodaran, Investment Valuation / Damodaran Online
• McKinsey & Company, Valuation: Measuring and Managing the Value of Companies
• Koller, Goedhart, and Wessels — DCF practice notes
• CFA Institute curriculum readings on equity valuation
• Damodaran / academic primers on relative valuation pitfalls

Every Wunder lesson is built from real, reputable sources — never invented.

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