We have provided some of the grounds here for not using partial
discounted cash flow analysis. No indications exist to our knowledge that this analysis method is being adopted by oil companies or enterprises in other sectors.
Under traditional
discounted cash flow analysis, uncertainty calls for increased discount rates, or decreasing the cash flow estimates to compensate for higher perceived risk.
"When applying the
discounted cash flow analysis, it may be difficult to obtain the cash flow forecast and projections of the investee ...
Failure to consider a
discounted cash flow analysis was the basis for expert exclusion in three BV cases.
There are chapters dedicated to each of the major valuations methods common to mergers and acquisitions including comparable company analysis, comparable transaction analysis,
discounted cash flow analysis, leveraged buyout analysis, and breakup analysis.
Standard industry forest evaluation runs "
discounted cash flow analysis" (dcf) for forestland acquisitions, which calculates the present value of future streams of income from log sales and other revenues plus the "terminal" value of the forestland at the end of the period.
The final section, on infringement damages, discusses lost-profit calculations,
discounted cash flow analysis, market-derived royalty rates, trademark damages, infringement of agricultural biotechnology-derived products, court-awarded royalty rates in patent infringement cases, trademark damage trends in the Federal Circuit, and trade secret damages.
BP shares continue to be rated as outperform relative to the sector with a fair value of 560p based upon
discounted cash flow analysis. BP remains our preferred UK major based upon solid fundamentals and strong growth prospects with improving returns over the medium term.
This "option" is not reflected in the
discounted cash flow analysis performed by the financial consultant.
Beyond a simple
discounted cash flow analysis, most accountants won't have had sufficient training to build spreadsheet models that can be applied to the complex business decisions managers regularly face.
Lane, "
Discounted Cash Flow Analysis and Long-Term Leases," The Appraisal Journal, April 1999.
The
discounted cash flow analysis for the base-case scenario indicates a net present value of approximately $130,000 at an 11.25 percent discount rate over a 10-year period (Table 9).
