As an investment banker, Kirsten Travers was responsible for valuing a company that is about to go public. She works out the initial worth of the share by dividing the total worth of the company by a certain number of shares. She then works with lawyers to draft a prospectus for buyers, which explains what a company does and the chances that the buyer will gain profits from his investment.

In order to find the total worth of a company, Travers uses the Discounted Cash Flows Model. The value of a company equals all future cash flows to the company, including both tangible and intangible resources. The following equation is essential to Travers' mathematical computations:

Value = S [(CFt to firm)/(1 + WACC)^t]

where CF = cash that's left over after sales-expenses, taxes, reinvestment into the company, and dividend payments ; and WACC= the weigted average cost of capital.

This equation, when used with geometric series formulae, can be used to calculate the company's worth. This method is important not only for investment banking, but also for Travers' current job, buying and selling stocks.