Discounted cash flow: accounting for uncertainty

Discounted Cash Flow: Accounting for Uncertainty

Valuation is the process of estimating price. The methods used to determine value attempt to model the thought processes of the market and thus estimate price by reference to observed historic data. This can be done using either an explicit model, that models the worth calculation of the most likely bidder, or an implicit model, that that uses historic data suitably adjusted as a short cut to d...

Simulation discounted cash flow valuation for internet companies

Discounted cash flow (DCF) is the most accepted approach for company valuation. It is well grounded in theory and practice. However, the DCF approach, which is commonly used for traditional companies valuation, presents a number of serious weaknesses within the Internet companies’ context. One of these weaknesses is tackling the uncertainty that characterize future cash flows of these companies...

Discounted Cash Flow Analysis Input Parameters and Sensitivity

Discounted cash flow analysis provides a means of relating the magnitude of expected future cash profits to the magnitude of the initial cash investment required to purchase an asset or to develop it for commercial production. The objectives of discounted cash flow analysis are to determine: < The net present value of a stream of expected future cash revenues and expenditures. < The rate of ret...

Toward a Certain Equivalent Discounted Cash Flow Model

Resource Investment Problem with Discounted Cash Flows

A resource investment problem is a project-scheduling problem in which the availability levels of the resources are considered as decision variables and the goal is to find a schedule, and resource requirement levels, such that some objective function optimizes. In this paper, we consider a resource investment problem in which the goal is to maximize the net present value of the project cash fl...