Generally speaking, a DCF valuation consists of two parts: a near-term cash flow projection discounted back,...

Generally speaking, a DCF valuation consists of two parts: a near-term cash flow projection discounted back, and:

a terminal value which captures the value of long-term cash flows

a premium value which captures the near-term risk components

a contingent value which captures upside volatility in the cash flows

an uncertainty value which adjusts the cash flows for the downside risk

Expert Solution

Generally speaking, a DCF valuation consists of two parts, the other one being:

a terminal value which captures the value of long-term cash flows

jeff jeffy answered 2 years ago

What are the advantages of the discounted cash flow (DCF) approach to valuation relative to the...

What are the advantages of the discounted cash flow (DCF) approach to valuation relative to the historical book-value approach? Are there any disadvantages?

For what type of firms is a Discounted Cash Flow (DCF) or Dividend Discount Model valuation...

For what type of firms is a Discounted Cash Flow (DCF) or Dividend Discount Model valuation technique most appropriate? What would be the challenge of using a DCF or DDM approach to value a technology company?

Discounted cash flow is commonly used in business valuation. What data is necessary for DCF? How...

Discounted cash flow is commonly used in business valuation. What data is necessary for DCF? How is that data used? How can you validate the data? What are the limitations of DCF analysis? Please supply your perspective on any or all of these questions.

Critically analyze the strengths and weakness of different stock valuation methods: Discounted Cash Flow (DCF), Dividend...

Critically analyze the strengths and weakness of different stock valuation methods: Discounted Cash Flow (DCF), Dividend Discount Model (DDM), Residual Income Model (RMI), and Valuation Ratios.

Identify and elaborate Discounted Cash Flow (DCF) and provide one example.

In addition to the dividend discount model (DDM) and discounted cash flow (DCF) model there are...

In addition to the dividend discount model (DDM) and discounted cash flow (DCF) model there are different other valuation models/metrics. Can you identify some of them? Different models may be appropriate for different firms in different industries. Can you identify which models/metrics may be more appropriate for specific industries/firms?

Identify the problems of the discounted cash flow (DCF) analysis for valuing a project and explain...

Identify the problems of the discounted cash flow (DCF) analysis for valuing a project and explain why it is important that real options be identified as part of the risk analysis of new investment.

MULTIPLE CHOICE: 1) Since it is based on cash flows, the discounted cash flow (DCF) method...

MULTIPLE CHOICE: 1) Since it is based on cash flows, the discounted cash flow (DCF) method of valuation has the added advantage that it is not subject to the bias of different: A. Discount rates B. Internal rates of return C. Monetary systems D. Accounting policies for determining total assets and net income 2) Which of the following budgets must be completed before preparing a cash budget? A. Cash receipts budget. B. Rolling budget. C. Cash financing budget. D. Pro...

compare the relative valuation and the discounted cash flow technique of valuation one will you prefer/...

compare the relative valuation and the discounted cash flow technique of valuation one will you prefer/ why?

Which of the following is not commonly used in discounted cash flow valuation to calculate the...

Which of the following is not commonly used in discounted cash flow valuation to calculate the value of the firm? a. Dividends. b. Free Cash Flow to the Firm. c. Free Cash Flow to Equity. d. Share Buy Backs Which of het following adjustments would you make after calculating the value of the firm to get to the value of equity? a. Subtract the value of debt. b. Subtract capital expenditures on new projects. c. Subtract the expected liabilities from...

Question