Talk:Valuation using discounted cash flows

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Notes[edit]

Somebody should include the meaning of the terms of the formula!--

DCF formula[edit]

Yes - they are connected and related closely

yes, i agree. someone should explain the formula. is it even correct? i think there must be a typo somewhere... —The preceding unsigned comment was added by 140.247.187.181 (talk) 05:34, 19 March 2007 (UTC).[reply]

Some sections need hard review, as risk is not applicable for negative cash flow, it is not logically correct. Overall it is more common to call Present Value, than Current value. FCFF formula is incorrect, working capital changes should be included.--86.100.69.19 16:18, 17 October 2007 (UTC)[reply]

DCF is a large topic, and is used to value companies as well as other securities. Company valuation is significantly different than using DCF to value a bond. I agree this page should be linked from another page detailing various ways to value a company (capitalization of earnings, FME). Brianegge (talk) 09:28, 25 November 2007 (UTC)[reply]

Formula missing description for h and st[edit]

In this formula

value of firm = $\sum _{t=1}^{n}{\frac {FCFF_{t}}{(1+WACC_{hg})^{t}}}+{\frac {\left[{\frac {FCFF_{n+1}}{(WACC_{st}-g_{n})}}\right]}{(1+WACC_{hg})^{n}}}$

What does h represent? What does st represent? Pocopocopocopoco (talk) 04:03, 11 April 2008 (UTC)[reply]

Suggestions[edit]

The example used for equity valuation does not even use the formula talked about! Someone who understands this should seek to revise it.
At some point in the future there should be a head article of company valuation
Definitely there should be a confusion concerning notation. It is not clear enough what h (subscript, s (subscript) and g (subscript) mean. Indeed, we do know what the discounted cash flow valuation formula means, nevertheless a more pedagogical and explained version would be welcome.
The article is not very clear about discount rates. The method showed (i.e. rates depending on company maturity) is more for early stage investments like VC/PE and is actually an exception to the more general method of discounting at WACC. The article should at least cite the "ordinary" WACC method before getting into the maturity-based discount rates.

Cash flow example[edit]

The cash flow example is a nonsense because, for one thing, the discount factor for 5 years is higher than for 4 years. I may decide to edit the example. ----Ehrenkater (talk) 14:16, 10 September 2019 (UTC)[reply]