Issues with Valuation Models: The Mitsubishi Estate Co. Case-

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  • 企業価値評価法の多様性 -三菱地所(株)のケースを手がかりとして-
  • キギョウ カチ ヒョウカホウ ノ タヨウセイ ミツビシ ジショ カブ ノ ケース オ テガカリ ト シテ

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Abstract

Valuation models offer great variety, the amount value depending on the model used. In order to compare amount differences by valuation model, this study valuated Mitsubishi Estate Co. using three approaches: income, market, and net assets. The results range widely from no value per share with the DCF model to 1,745.5 yen per share with the market assets value model. The income approach of the DCF model requires cash flow and discount rate estimation. The market approach enables selecting comparable companies subjectively, even though this approach does not require estimation. Valuation models present tendencies with the valuation objects they use. For justice, a net assets model and a discounted dividends model dominate, but the DCF model is rare. For M&A, the DCF model, the multiply model (relative valuation) is popular. Methods for investment decision making like NPV and IRR are also used. Security analysts prefer the multiply model and DCF model. The residual income model that Penman advocates is rare in practice. Firm valuation is neither purely a hard science nor a pure art, the truth lying between science and art.

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KJ00006723920

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