COERENŢE ÎN APLICAREA METODEI DISCOUNTED CASH-FLOW
CONSISTENCY IN APPLYING DISCOUNTED CASH-FLOW METHOD

Summary/Abstract: The discount cash-flow analysis is the latest and the most complex way to evaluate a company. It is done by adding the shareholders or the company’s net cash-flow to the expected return value. The main coherences and correlations necessary for applying the DCF method are the following: - if the shareholders net cash-flow is calculated, the required rate of return will equal the cost of capital, and if the company ’s net cash-flow is estimated, the required rate rate of return will equal the weighted average cost of capital ; - if the estimations are done in nominal terms (including the inflation), than the required rate of return is also estimated in nominal terms, and if the cash-flow analysis is done in real terms (without inflation ), than required rate of return will also be estimated in real terms. - the „g” grouth rate can be higher than the „a” required rate of return, only on the explicit time of evaluation and only for fast- developping firms.

• Details
• Contents