discounted cash flow method
71Payback Period — The length of time required to recover the cost of an investment. The payback period of a given investment or project is an important determinant of whether to undertake the position or project, as longer payback periods are typically not… …
72economic appraisal — A method of capital budgeting that makes use of discounted cash flow techniques to determine a preferred investment. However, instead of using annual projected cash flows in the analysis, the technique discounts over the project s life the… …
73economic appraisal — A method of capital budgeting that makes use of discounted cash flow techniques to determine a preferred investment. However, instead of using annual projected cash flows in the analysis, the technique discounts over the project s life the… …
74Abnormal Earnings Valuation Model — A method for determining a company s worth that is based on book value and earnings. Also known as the residual income model, it looks at whether management s decisions cause a company to perform better or worse than anticipated. The model says… …
75Comparable Transaction — A method of valuing a company that is for sale. Comparable transactions considers the past sales of similar companies as well as the market value of publicly traded firms that have an equivalent business model to the company being valued. To get… …
76Weighted average cost of capital — The weighted average cost of capital (WACC) is the rate that a company is expected to pay to finance its assets. WACC is the minimum return that a company must earn on existing asset base to satisfy its creditors, owners, and other providers of… …
77Cost of equity — In finance, the cost of equity is the return (often expressed as a rate of return) a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital. Firms need to acquire… …
78Modified Book Value — An asset based method of determining how much a business is worth by adjusting the value of its assets and liabilities according to their fair market value. This technique also includes the value of all of the business’s intangible assets… …
79capital budgeting — capital investment appraisal; = investment appraisal The process by which an organization appraises a range of different investment projects with a view to determining which is likely to give the highest financial return. The approaches adopted… …
80decision model — A model that simulates the elements or variables inherent in a business decision, together with their relationships to each other and the constraints under which they operate; the purpose of the model is to enable a solution to be arrived at in… …
