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DETERMINANTS OF VALUE OF ENTERPRISES AND REDUCED STOCHASTIC VALUATION MODEL

The study examines the key determinants of enterprise value, emphasizing financial factors that directly influence business valuation. The primary objective is to develop a simplified model in which investment costs are not considered an independent variable but rather an endogenous result of revenues and profitability. The model employs stochastic processes to describe the dynamics of sales and operating margins, assuming that sales follow a Geometric Brownian Motion (GBM), while operating profitability…