deletions | additions       diff --git a/section_Building_a_Profitability_Valuation__.tex b/section_Building_a_Profitability_Valuation__.tex  index 1e1425d..dde4cdc 100644  --- a/section_Building_a_Profitability_Valuation__.tex  +++ b/section_Building_a_Profitability_Valuation__.tex 
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\begin{equation}  EV_{t}=\displaystyle\sum_{i=1}^{K}\frac{FCFF_{t+i}}{(1+R)^i}+\frac{EV_{t+K}}{(1+R)^K}  \end{equation}  where $EV_{t}$ is the enterprise value of the firm generating the free cash-flows ($FCFF$). $R$ is the discount rate, or the return required by shareholders and debt holders. $R$ is effectively the cost of capital for the firm and is equivalent to the concept of $WACC$ used by the financial analyst community.  \\  \\  Secondly, we need to define the different components of the model. We follow Damodaran and use his definitions. We are quite aware that there exists numerous definitions for each of the following concepts but Damodaran's definitions can serve as a starting point, where other definitions are refined versions of these basics definitions. Specifically, Damodaran posts articles on his blog (\textit{http://pages.stern.nyu.edu/~adamodar/}) that summarize the courses he teaches at the Stern School of Business at New York University. In an article posted in 2013 entitled "A tangled web of values: Enterprise value, Firm Value and Market Cap" Damodaran gives a very clear definition of the accounting concepts we will be using. As a starting point, the balance sheet allows us to write the following accounting identity :