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Financial Analysis-Discounted Cash Flow(DCF)
DCF valuation methods are techniques that use time value of money concepts to measure the present value of cash flows expected from a project.
Rate used in DCF:
-Management may use a Weighted Avg.Cost of Capital(WACC)method,or
-Assign a target for new projects to meet,or
-Recommend that the discount rate be related to the risk
specific to the proposed project.If the proposed project
is similar in risk to ongoing projects of the company,
WACC is appropriate because it reflects the market‘s
assessment of the average risk of the company‘s projects.
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