The calculation method and steps of the Discounted Dividend Method are similar to those of DCF model, except that discounted item is the dividend. Since Chinese companies do not distribute dividend frequently, this method is not applicable in China.
There are two methods to determine the discount rate in DCF model: a) Weighted Average Capital Cost: K=We*Ke+(1-We)*Kd*(1-t) Where, K——weighted average capital cost of the company Ke——capital cost of equity Kd——capital cost of long-term debt before tax We——the ratio of equity to total asset t —— income tax rate b) CAPM Ke=Kf+β*(Km-Kf) Where, β—— market risk […]
The calculation formula is:
V=∑CFt/(1+i)
a) The successful application to holding 2008 Olympic game, the entrance to WTO and also the successful holding of APEC Conference have demonstrated the great development potential of China as well as the unlimited investment opportunity in Chinese capital market. b) The incorporation of reform and opening policy into law system has guaranteed a stable […]
Indirect M&A follows two steps as below： a) Set up a new subsidiary company or holding company; and b) Merge the target company through the newly established company
Direct M&A is a purchase method where the purchasing company directly buys the asset and/or equity of the target company. The legal entity of the newly established foreign invested company can be either the purchasing company or the target company. The legal entity should not only take over the assets but also the liabilities.
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