Discounted cash flow, Financial Management

Assignment Help:

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.


Related Discussions:- Discounted cash flow

Organizational structure of pension funds, Organizational Structure of pens...

Organizational Structure of pension funds In an investment organization such as pension funds, endowments, life and casualty insurance companies, the central bank's investment

Advantages of budgetary control, ADVANTAGES OF BUDGETARY CONTROL 1. Pr...

ADVANTAGES OF BUDGETARY CONTROL 1. Profits are maximizes. 2. It makes easy the controlling of activities. 3. Effective co-ordination is made achievable. 4. Executive

Double declining balance method , Suppose that the business uses the double...

Suppose that the business uses the double declining balance method to depreciate  its equipment (a)  Determine the net book value, depreciation expense, and accumulated deprecia

Sovereign debt , Sovereign debt is a debt instrument guaranteed by th...

Sovereign debt is a debt instrument guaranteed by the government. The other names for sovereign debts are sovereign bonds or government bonds. They are issued in

Explain about the valuing securities, Explain about the Valuing Securities ...

Explain about the Valuing Securities Objective of any investor is to maximise expected returns from his investments, subject to various constraints, primarily risk. Return is m

WACC, Keys Printing plans to issue a $1,000 par value, 10-year noncallable ...

Keys Printing plans to issue a $1,000 par value, 10-year noncallable bond with a 5.00% coupon, paid semiannually. It should sell at par. The company''''s marginal tax rate is 40.00

Why does money have time value, Why does money have time value? Positiv...

Why does money have time value? Positive interest rates point toward that money has time value.  When one person lets one more borrow money, the first person needs compensation

Describe the value maximisation criterion, Describe the value maximisation ...

Describe the value maximisation criterion In applying the value maximisation criterion, term value is used in terms of worth to the owners, which is, ordinary shareholders. Cap

Determining the appropriate rates in valuation process, After estimat...

After estimating the cash flows, the next step is to determine the appropriate interest rate that should be used to discount the cash flows. The minimum return re

Constructing the binomial interest rate tree, How to calculate the up anh d...

How to calculate the up anh down factor in the binomial interets rate tree

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd