Investment appraisal Essay Example | Topics and Well Written Essays - 1500 words

Investment appraisal - Essay ExampleThis analysis has been conducted based on several fiscal theories related to fair-mindedness valuation. 1 Introduction 1.1 History of Google Google, a name synonymous with world draw in specializing in internet related services and product. The product and services offered by Google are wide and its operations are expanding at a rapid pace. The primary services offered by this giant sens include cloud computing, software and online advertising. As per the latest and historical financial analysis, the caller-out has been deriving its primary(prenominal) revenue from the Adwords. Google was founded Larry Page and Sergey Brin who own about 16% of the shares of the corporation as per the latest annual story of the company. Soon after the initial public offer (IPO), the companys revenue, and in turn its lucrativeness has increased by leaps and bounds. The initial public offering of the company took place on August 19, 2004. On this historical d ate, around 19,605,052 shares of the company were offered at a price of $85 per shares. The mode of the sale of the shares was suggested to be through online auction. Through this IPO, the company was able to generate a great deal of capital marrow to around $ 1.67 billion resulting in a market capitalization of over $ 23 billion. However, the majority of the Google shares remained to a lower place the control of the Google. The paper evaluates the price of the shares of Google at the time of its IPO. Through applying different justness valuation method, it usher out be evaluated whether the share was overpriced or under priced. 2Financial military rank 2.1 Introduction to equity valuation blondness valuation can be defined as the process of identifying the current market value of the company which is also regarded as the current market capitalization of the company. There are several step of equity valuation process and it requires an adequate understanding of financial manag ement techniques and acumen. 2.2 Equity valuation techniques The most meaning(a) step in equity valuation process is the selection of an appropriate valuation place. Few models astray used in financial evaluation are as under Net Asset Valuation Price Earning Valuation Dividend growth model Based on the above valuation models, an analyst predicts the equity value of the company by selecting any one of the above mentioned models which appears to be apt in the circumstances. at last the investor must make an investment decision based on the calculated value of equity in the above step. This decision involves investment recommendation to the investor whether it is financially feasible to invest in the stock of the company being valued or not. If the analyst concludes that the equity value of the company is as such which is importantly greater than the current book value of the company, then it represents that the company will reap benefits in the future tense for the investors, th us the investment decision would be financially viable. 2.3 Net Asset Valuation Net plus valuation is also called the net worth of a company. It is simple valuation model which is based on the recoded balance on the balance sheet items of a company. The stock price of the share under this model can be calculated by divided the net