From 27a415fef213b3628851db5c48095f8bc7ca7ad1 Mon Sep 17 00:00:00 2001
From: ronny abraham <ronny@ronnys-MacBook-Pro.local>
Date: Mon, 28 Jul 2025 09:10:52 +0300
Subject: [PATCH] finished ch65, added stub for ch66

---
 mba-main.org |  1 +
 mba/ch65.org | 39 ++++++++++++++++++++++++++++++++++++++-
 mba/ch66.org |  9 +++++++++
 3 files changed, 48 insertions(+), 1 deletion(-)
 create mode 100644 mba/ch66.org

diff --git a/mba-main.org b/mba-main.org
index bb0dbc2..dd497de 100755
--- a/mba-main.org
+++ b/mba-main.org
@@ -70,3 +70,4 @@
 ** seciton 12 - Initial Public Offering (IPO)
 - [[./mba/ch64.org][Chapter 64. How an IPO works]]
 - [[./mba/ch65.org][Chapter 65. How DCF (Discount Cash Flow) analysis works]]
+- [[./mba/ch66.org][Chapter 66. Valuing a Company vs Competition]]
diff --git a/mba/ch65.org b/mba/ch65.org
index 4cdc9be..8ab0268 100644
--- a/mba/ch65.org
+++ b/mba/ch65.org
@@ -11,10 +11,47 @@
 ** take the average of three valuations
 - price / earnings
 - price / sales
-- [[#dcf][Discounted Cash Flow (DCF)]]
+- DCF
+** [[#dcf][Discounted Cash Flow (DCF)]]
   - because cash flow is similar to net income for tech stocks it makes things easier [[#cashflow-diff][link 1]] [[#cashflow-diff-real][link 2]]
 
   - DCF is the value of all future cash flows discounted today
+*** how we do it
+- assume we are going public in 2020
+- need to look at cash flow for 2020-2025
+- calculate WACC (cost of capital)
+- calculate beta from the internet
+  - three companies similar to ours
+  - average it out
+
+*** formulas
+****  weighted average cost of capital
+  - \( \text{WACC} = \text{Cost of Equity} + \text{Cost of Debt} \)
+
+  - we subtract debt b/c it's a hi tech company
+
+**** Cost of Equity Formula
+
+\( \text{Cost of Equity} = r_f + (r_m - r_f) \cdot \beta \)
+
+Where:
+- \( r_f \) = Risk-free rate (government rate)
+  - theoretical rate of return on an investment with zero risk
+  - how much an investior would expect on a completely safe investment over a given time period
+  - usually based on yield of government bonds
+- \( r_m \) = Stock market return
+  - expected or historical average annual return of a broad stock market index
+    - S&P 500
+    - TA-125
+    - MSCI World Index
+  - annual return (%) expected from the overall stock market
+- \( \beta \) = Volatility (beta) of the company
+  - finanicial websites that list ϐ (beta)
+    - yahoo finance -> search for a stock -> under statistics -> see Beta
+    - google finance, morningstar, marketwatch
+
+  - beta measures how much a stock moves relative to the market
+    - you can calculate it
 
 * definitions
 ** Discounted Cash Flow (DCF)
diff --git a/mba/ch66.org b/mba/ch66.org
new file mode 100644
index 0000000..ef073a4
--- /dev/null
+++ b/mba/ch66.org
@@ -0,0 +1,9 @@
+#+title: Section 11 | Lesson 66 - valuing a company vs competition
+#+HTML_HEAD: <link rel="stylesheet" type="text/css" href="../_share/media/css/org-media-sass/categories/business.css" />
+#+OPTIONS: H:6
+
+* Links
+- [[./../mba-main.org][TOC | Business]]
+- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4301156#overview][S12:L66 course video]]
+
+* notes