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Episode 043: Eduardo Repetto on factor investing, host Rick Ferri

Bogleheads On Investing Podcast

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How to Value a Company

The price stamping for your company is your equity plus a discounted value of your future cash flows. A company that has higher spectral returns will have a lower price for the same equity value and for the same cash flow expectations than a company that has a lower spectral returns. So I need to take into account not only the equity that I can use book value as a proxy for equity but also the cash flows of the company. And these three variables are related to the discount rate, to the spectral returns.

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