Determining the value of a company involves understanding various financial theories and models. One critical aspect is calculating the cost of capital, which includes the weighted average cost of capital (
The value of the company is determined
by the NPV of its future cash flows
CAPITAL ASSET PRICING MODEL
DIVIDEND GROWTH MODEL
DISCOUNTING AND
THE VALUE BONDS
NET PRESENT VALUE
DISCOUNTED CASH FLOW
THE EFFICIENT MARKET HYPOTHESIS
THE STRONG FORM
Current prices reflect all the available information which could be known.
THE SEMI-STRONG FORM
All published financial information is already included in the current share price.
THE WEAK FORM
All historical price information is incorporated into current share prices.
THE DIVIDEND THEORY
If a change in dividend policy is to have no effect on share value this change must cause an equal but opposite change in the expected capital gain component of total return.
