Equidam

APRIL 26, 2025

Furthermore, any quantitative valuation method, particularly the Discounted Cash Flow (DCF) approach, is highly sensitive to the underlying assumptions about growth rates, discount rates, and terminal values. This incorporates the risk-free rate, a market risk premium specific to the company’s country, and Beta ($beta$).

Discounted Cash Flow 59

Discounted Cash Flow Terminal Value Book Value Beta 59

Brian DeChesare

MAY 3, 2023

The DDM is more grounded because it’s based on the company’s actual distributions and potential future value. And it values the company today based on the present value of its dividends and that potential future value (either the stock price or the Equity Value via the Terminal Value calculation).

Dividends 64

Dividends Terminal Value Enterprise Value Equity 64

Valutico

OCTOBER 20, 2022

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). Explaining The Terminal Value. How do I calculate the Terminal Value?”

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52

Valutico

SEPTEMBER 13, 2023

SMEs can present challenges with DCF due to limited historical financial data, unreliable information, inadequate financial forecasts, and difficulty in determining terminal value. However, market information required for CAPM, such as beta coefficients and risk premiums, may not be available for SMEs.

Discounted Cash Flow 52

Discounted Cash Flow Comparable Company Analysis Asset-based Approach Intangible Assets 52

Valutico

AUGUST 10, 2023

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 terminal value) is a subjective process that often leads to disagreements.

Discounted Cash Flow 52

Discounted Cash Flow Asset-based Approach Intangible Assets Business Valuation 52

Brian DeChesare

AUGUST 10, 2022

The entire Energy Services vertical is like a “high Beta” play on oil and gas prices. Essentially, the NAV Model is a super-long-term DCF without a Terminal Value. The Terminal Value doesn’t make sense in this vertical because oil and gas resources are finite; you can’t assume that a company will keep producing “forever.”.

Banking 98

Banking Dividends EBITDA Equity 98

Equidam

APRIL 22, 2025

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 1] , [21] , [23] , [29] The terminal value is estimated by applying a relevant market multiple (e.g.,

Discounted Cash Flow 64

Discounted Cash Flow Terminal Value Marketability EBITDA 64