Hello Everyone,
I hope that this issue finds you doing well.
This issue contains the second Technical Paper from the Business Valuation Committee: “Reinvestment Considerations in Terminal Value Estimates: Capital Expenditures and Depreciation Levels That Result in Appropriate Reinvestment Rates.” If you have any thoughts to share regarding it, please feel free to contact me or the BV Committee.
Professor Robert Brooks of the University of Alabama has written an article describing his option-based DLOM model. This model is more general than others and allows inputs for not only volatility and maturity, but also investor skill and hedging availability. The added flexibility of the model may be of great interest to you. For some engagements we work on, it may be reasonable to assume a certain degree of investor skill if the owner is an insider or especially well informed (assuming no violation of securities trading laws, of course). I'd...
