Q5 Enrons stock price traded around $62.

72 per share at the end

of April 2001. Do you think Enron was worth that much?
Stock Valuation through DCF method
Cost of Equity
Cost of Debt:
Market
capitalization
Debt
WACC

CFO
Capex
Free cash
flow
Discounting
factor
Discounted
FCF

12.05
5
(average yield baa
8.37 bond)
99.7
($83.13 * 1200000000)
56 bn
19.9
4 bn
10.95
31

2000
4779.
00
2381.
00

2002 2003

200
4

200
5

200 Perpet
6 uity

2.40

2.64

2.90

3.19

3.51

3.86

4.25

74.93

1.00

1.11

1.23

1.37

1.52

1.68

1.87

1.87

2.40

2.38

2.36

2.34

2.32

2.30

2.28

40.16

Enterprise
Value
Value of Debt
Total Value of Equity
Price of Share

200
1

(Deb
t

56.521
52
19.94
36.581
52
30.484
6

The estimated price of Enron is $30.48 according to the above DCF analysis. This
shows that the stock was over valued,