Abstract
This paper presents a real valuation performed by a well-known investment bank, with two common errors and with two very different values for the equity of a firm: a) €6,9 million calculating the Present Value of expected free cash flows (FCF) discounted with the WACC rate and then, subtracting the value of debt; b) €4,2 million calculating the Present Value of expected equity cash flows (ECF) discounted with the Ke rate (required return to equity). We identify the two main errors of the valuation of the investment bank and calculate the “right solution”: €5,9 million. The paper also contains 210 answers and 56 comments from readers to the questions of the previous paper (The Most Common Error in Valuations using WACC https://ssrn.com/abstract=3512739 that did not contain the “right solution”.)
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