CHAPTER9:DISCOUNTEDCASHFLOW(DCF)VALUATION * WITHFINANCIALPLANNINGMODELS thisversion:July27,2003 Chaptercontents Overview...1 9.1.Whatdoes“valueofthefirm”mean?...
In discounted cash flow valuation, we begin with a simple proposition. The value of an asset is not what someone perceives it to be worth but it is a function of the expected cash flows on that asset. Put simply, assets with high and predictable cash flows should have higher val...
Chapter 4 Discounted cash flow valuation Chapter4:Discountedcashflowvaluation CorporateFinanceRoss,Westerfield,andJaffe Outline 4.1Futurevalue4.2Presentvalue4.3Otherparameters4.4Multiplecashflows4.5Comparingrates4.6Loantypes Definitions Presentvalue(PV):earliermoneyonatimeline.Future...
Chap06 discounted cash flow valuation
Discounted Cash Flow Valuation Key Concepts and Skills Be able to compute the future value of multiple cash flows Be able to compute the present value of multiple cash flows Be able to compute loan payments Be able to find the interest rate on a loan Understand how interest rates are quoted...
Discounted cash flow valuation Chapter 4 Discounted cash flow valuation 4.1 Valuation: the one-period case 10,000 (return of principle) + (0.12 x 10,000) (interest) = 11,200 Future value / compound value Present value PV = C1 / (1+r) ...
Where C1 is cash flow at date 1, and r is the appropriate interest rate. Net Present Value (NPV) The Net Present Value (NPV) of an investment is the present value of the expected future cash flows, less the initial cost of the investment. ...
Chapter 12: Cash Flow Estimation and Risk Analysis I.Identifying the Relevant Cash Flows A. -Cash flow-net in come or profit: Projects should be judged on their effect on cash flows. Net in come con siders acco un ti ng conven ti ons and financing which are un related to a project....
Chapter 4: Discounted cash flow valuation Corporate Finance Ross, Westerfield, and Jaffe Outline 4.1 Future value 4.2 Present value 4.3 Other parameters 4.4 Multiple cash flows 4.5 Comparing rates 4.6 Loan types Definitions Present value (PV): earlier money on a time line. ...
Discounted Cash Flow (DCF) valuation is a financial approach that analyzes predicted future cash flows to calculate the present value of an investment or a company. It considers the idea that the value of money obtained in the future is less than the value of money received today. This is ...