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View Vincent Carson's Comments
Apple's Actual Value In Free Cash Flow Terms
Although you did a good job of explaining step by step your valuation, I do not believe a discount rate of 35% makes sense. This should already be incorporated in your model when computing FCFE; EBIT * (1 - tax rate). I believe this would imply your double counting the tax rate. The discount rate should incorporate time value of money items like the risk free rate, inflation risk, and liquidity risk. Nevertheless, the overall point is well taken. Conservative measures inputted into the FCFE model still implies a buy on Apple.
Mar 5, 2013. 11:17 PM
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