FVC2025. Discounted Cash Flows: Factoring In the Future

The session will explore the use of the discounted cash flow method under the income approach of valuation. We will discuss the significance of forecasts and the valuation analysts responsibility to determine resonableness. We will also discuss the necessary cash flow adjustments under both the invested capital and the direct to equity method. Finally, we will discuss discount rates, calculation of terminal value and discounting considerations.

Learning Objectives:

• Identify when to apply the discounted cash flow method under the income approach of valuation.
• Review free cash flow adjustments under both the invested capital and equity methods
• Recognize the proper discount rate given the cash flows calculated.