alleryStart learning →Which sequence does a DCF valuer follow?
ATake book value, add goodwill, deduct tax
BAverage past prices and double the result
CCopy a rival firm's quoted market price
DForecast cash flows, set a risk rate, discount them
Answer & Solution
Correct answer: D. Forecast cash flows, set a risk rate, discount them
A DCF valuation needs projected cash flows, a discount rate that reflects their risk, and then a present value calculation.
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