Learn the differences between the perpetuity growth model and the exit approach for calculating terminal value in DCF analyses. Choose the best method for your investments.
The DCF model is powerful but highly sensitive to key inputs: discount rate, perpetual growth rate, and growth assumptions. Choosing the right discount rate is crucial; too low or too high a rate can ...
DCF valuation helps you figure out what an investment is worth today based on projected cash flows by adjusting for risk and time. A critical weakness in many DCF models lies in the terminal value — ...
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