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Bridge over ocean
1 March 2000 Financial Analysts Journal Volume 56, Issue 2

Finding Firm Value without a Pro Forma Analysis (corrected)

  1. Tom Arnold
  2. Jerry James

We present a firm value calculator (FVC) that uses applications of growth-annuity and growth-perpetuity equations. The FVC provides the same detailed analysis of firm value as the more complicated pro forma analysis and can thus replace a pro forma analysis or be used to check or correct it. The FVC can be easily implemented—through either a computer spreadsheet or a handheld calculator. The algorithmic nature of the FVC may also be implemented through computer programming to quickly produce a large number of analyses, which can save a practitioner a great deal of time when many companies are to be analyzed or compared.

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