Remove Net Present Value Remove Terminal Value Remove Weighted Average Cost of Capital
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Issues faced when valuing a declining company

Andrew Stolz

Quoted from Wall Street Oasis.com, it describes discounted cash flow (DCF) process by estimating the total value of all future cash flows (both inflow and outflow), and then discounting them (usually using Weighted Average Cost of Capital – WACC ) to find a present value of the cash flow.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

This value is widely referred to as the “Net Present Value” (NPV). . Well, the short answer is after that forecast period where we estimate each year’s cash flows then discount them, we add a single number at the end to account for all the theoretical years in the future, called the Terminal Value (TV).

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M&A Valuation Methods: Your Essential Guide with 7 Key Methods

Valutico

This rate typically reflects the weighted average cost of capital (WACC) which accounts for the risk associated with the future cash flows and the capital structure of the company. The terminal value can be estimated using the perpetuity growth model or the exit multiple approach.