# How to calculate the value of a business in 2018

Instruction

If you want to calculate the cost

**of business**in the forecast period, then use the method of discounting cash flows. It involves the use of a discount rate, i.e. the interest rate used to bring future income to present value. In this case, the estimated cost**of business**will be calculated as follows: P =? CFt / (1 + I) ^ t, where CFT is the cash flow for the period t; I is the discount rate; t is the number of the period at the beginning of which the estimate is made**of business**.
But you must understand that the company continues its work in the post-forecast period. Depending on the development prospects of the company, various options are possible: from its stable growth to bankruptcy. For rate

**of business**You can use the Gordon model, which assumes that the growth rates of sales and profits are stable, and the amount of depreciation equals the value of capital investments. In this case, the cost**of business**is defined as follows: P = CF (t + 1) / (Ig), where CF (t + 1) is the cash flow in the first year of the post-forecast period, I is the discount rate, g is the cash flow growth rate. the market’s capacity is large, supplies of raw materials and materials are stable, the company has access to the necessary monetary resources, the market situation is favorable.
If in the post-forecast period bankruptcy of the enterprise is expected with the further sale of its property, then use the following calculation: P = (AO) x (1 - Lav) - Rlik, where A is the sum of assets with revaluation; O is the amount of liabilities; Lav is a discount for urgency at liquidation; Rlikv - expenses for liquidation.

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