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Here are some of the most common approaches: Discounted Cash Flow (DCF) Analysis : This method calculates a security’s present value based on its expected future cash flows. The cash flows are discounted back to their present value using a discount rate, reflecting the investments risk.
Here are some of the most common approaches: Discounted Cash Flow (DCF) Analysis : This method calculates a security’s present value based on its expected future cash flows. The cash flows are discounted back to their present value using a discount rate, reflecting the investments risk.
Discounted Cash Flow (DCF) Analysis What is DCF? DCF analysis estimates the value of a company based on its future cash flows, discounted back to the present value using a specific discount rate. This method looks at past M&A transactions involving similar companies to establish a fair value for shares.
Market-based methods like Comparable Companies Analysis and PrecedentTransactionsAnalysis offer relative measures of value based on market data. Income-based methods such as Discounted Cash Flow analysis focus on future cash flows to determine value. Simplicity: Relatively easy to understand and implement.
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