The Research Of The Application Of Adjusted Present Value In Qingdao Haier Co.,Ltd Appraisement

Cash Flow Discounted Model is the most popular approach in enterpriseappraisement. It requests the enterprise’s capital structure remain stable. But mostenterprises can not reach this requirement. So Cash Flow Discounted Model does notsuit to these enterprises and a proper approach is needed. The problem of Cash FlowDiscounted Model lies in that its discounted rate depends on the capital structure. Ifwe can find a approach whose discounted rate is independent to its capital structure,this problem could be solved.The Adjusted Value Model divides the enterprise’s value into two parts: One isunlevered equity value，the other is tax shield value. Both the discounted rate it usedis not depended on the capital structure. So this model can be used to appraise thoseenterprises’ value whose capital structures do not remain stable.This thesis firstly raises the question that Qingdao Co,.LTD’s capital structurechange every year because of its strategy on reducing the associated trade, and theCash Flow Discounted Model can not be use to appraise its value. Then this thesisintroduce a model, called Adjusted Value Model, which can be use to appraise thevalue of those enterprises whose capital structure change. We also point out how to setall the parameters of Adjusted Value Model, and the advantage of it to the WeightAverage Capital Cost Model. Finally, we use this model to appraise the value ofQingdao Co,.LTD and try to give an example of how to use this model to the real case.We get the result that The Adjusted Value Model not only could avoid the problemsthe WACC Model meets, but also could get the proper value of the enterprise. Finallywe give some advice in using the Adjusted Value Model.