What are two weaknesses of the dcf model

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Reference no: EM133344215

Questions:

1 . What are two of the most common scenarios used in addition to a base case scenario in a scenario analysis? Explain what purpose a scenario analysis serves when analyzing a company's expansion plan. Be specific and provide an example.

2. A financial policy supporting management's decision to liquidate assets, raise capital to initiate a share buyback program to common shareholders, and pay dividends to preferred shareholders does not qualify as a good financial policy. Support your response by explaining which, if any, of the three basic tests good financial policies meet applies.

3. When a discounted cash flow (DCF) model is used to estimate the intrinsic value of a company, many decisions are made.

a. What are two weaknesses ofthe DCF model?

b. Provide two examples of an attribute, asset, specialization, or value a company has that is not included in a discounted cash flow (DCF) model justifying a higher valuation?

4. Under what circumstances would it make sense to issue new debt to buy back equity shares? Be speci?c.

Reference no: EM133344215

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