Discounted cash flow, Financial Management

Discounted Cash Flow

A technique used to present a forecasted stream of future cash flows in conditions of its present value, or its value in today's dollars. Discounted cash flow is the fundamental principle underlying business valuations and is used for several purposes:

  • To determine the price of a partnership interest in a buyout contract
  • To calculate the expected future advantages to investors in either debt obligations or equity interests
  • To value debt obligations for debt/equity swaps
  • To value minority benefit
  • To designate the value of partial interests in an entrepreneurial industry for divorce settlements
  • To assess estate taxes

Many valuation techniques are used by analysts, investors, appraisers, the IRS, and another, most of which employ discounted cash flow as the primary tool. For certain kinds of companies, such as hotels and other real-estate based businesses, the internal rate of return technique can efficiently calculate the discount rate to be used in discounted cash flow analyses.

Posted Date: 10/16/2012 5:28:32 AM | Location : United States

Related Discussions:- Discounted cash flow, Assignment Help, Ask Question on Discounted cash flow, Get Answer, Expert's Help, Discounted cash flow Discussions

Write discussion on Discounted cash flow
Your posts are moderated
Related Questions
Other than zero coupon bonds, all fixed income securities make periodic payments in the form of coupon interest. This coupon interest can be rei

Q. Types of financial statement analysis? 1) External analysis This analysis is performed by external stakeholders like lenders, suppliers, investors, and governments. 2)

Generally Accepted Accpunting Principle or GAAP The American Institute of Certified Public Accountant (AICPA) elaborates financial accounting theory and commonly accepted acco

Explain about money markets by maturity of the securities. On the basis of the maturity of the securities traded, money markets can be introduced here: Money markets are financ

Explain how management goals are incorporated into pro forma financial statements. Management locates a target goal, and forecasters produce pro forma financial statements within

Defined Contribution Plans In defined contribution plans, the contributions made by or on behalf of the employee are accumulated and paid on retirement along with such return a

er diagram

Differences between IAS 14 and IFRS 8 IFRS 8 requires identification of operating segments based on internal reports which are regularly reviewed by management for decision

State about the Internal Benchmarking Compare an internal function to 'the best internally' within same organisation for example different methods of cleaning used by hospit