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SMEs can present challenges with DCF due to limited historical financial data, unreliable information, inadequate financial forecasts, and difficulty in determining terminalvalue. However, market information required for CAPM, such as beta coefficients and risk premiums, may not be available for SMEs.
However, market information required for CAPM, such as beta coefficients and risk premiums, may not be available for SMEs. Lastly, determining the continuity value (or terminalvalue) is a subjective process that often leads to disagreements. Valuing an SME isn’t about choosing one method over another.
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