Focusing on the intricacies of firm valuation, this open access book delves into the calculation of discounted cash flow (DCF) and its various competing methodologies, including entity and equity approaches. It highlights key concepts like adjusted present value (APV) and weighted average cost of capital (WACC), both categorized as entity approaches. Aimed at economists in finance, the book explores the nuances of these valuation techniques and their implications in the field.
The textbook offers a clear and intuitive introduction to the foundational concepts of modern financial theory, specifically designed for Business and Economics Ph.D. students. It covers essential topics such as Brownian motion, random processes, measures, and Lebesgue integrals, making complex ideas accessible to those with minimal prior knowledge. Additionally, it provides mathematical definitions and explores the historical context behind key terms, enriching the reader's understanding of the theories presented.