American Eagle Apparel Stores. By: Nick Cecero. Residual Enterprise Income Valuation Model. This method estimates value using accounting numbers which are readily available as compared to the cash flow-based valuation model. Is this method superior to the DCF Model?
By: Nick Cecero
rEnt = (0% * ($-488,524/$2,064,016)) + (8.88% * ($2,552,540/$2,064,016))
1) Terminal Values are Highly Uncertain
2) Firms that do not have free cash flows
3) Non Dividend Paying Firms