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

Explain the working of insurance companies, Insurance companies The pri...

Insurance companies The primary purpose of insurance companies is to protect individuals and firms known as policy-holders from adverse events. Insurance companies receive prem

A company has total debt , A company has total debt of $1,200 and a debt-eq...

A company has total debt of $1,200 and a debt-equity ratio of 0.5. What will be  the value of the total assets?

Partnership, Par tnership A legally authorized business form in wh...

Par tnership A legally authorized business form in which two or more partners are co-owners, sharing profits, losses, and liabilities related with the business they own.

Investment objectives, Investment Objectives: Any investment should alw...

Investment Objectives: Any investment should always start with identifying its objective. Thus, the first step in the pension fund investment management system is defining the

Brief of measurement of interest rate risk, A manager must be able to quant...

A manager must be able to quantify as to what will result from an adverse change in interest rates to control interest rate risk. Different types of valuation mode

Financial Planning, report on Financial Planning and Forecasting

report on Financial Planning and Forecasting

Laspeyres method, Laspeyres Method Laspeyres method uses the quantities...

Laspeyres Method Laspeyres method uses the quantities consumed during the base period in computing the index number. This method is also the most commonly used method which inc

Gordan model, A company has a total investment of Rs 500,000 in assets, and...

A company has a total investment of Rs 500,000 in assets, and 50,000 outstanding ordinary shares at Rs 10 per share (par value). It earns a rate of 15 per cent on its investment, a

The ex-dividend price of novis stock, The net income of Novis Corporation i...

The net income of Novis Corporation is $45,000.  The company has 20,000 outstanding shares and a 100 percent payout policy.  The expected value of the firm one year from now is $1,

Finance company vital role in investment intermediaries, How is the finance...

How is the finance company play a vital role in investment intermediaries? Finance companies: Finance companies make loans to corporations and individuals by giving consu

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