The Limitations of the DCF Approach
This module takes a closer look at the limitations of the DCF model and the assumptions used to make it work. Then it shows how to use sensitivity analysis to examine the sensitivity of the base case valuation to changes in the value driver, WACC and terminal value assumptions. Then it shows how to use scenario analysis and Monte Carlo simulations to further refine the valuation.This course replicates the content from lesson 6 from Business Valuation. A Core NYIF Course.
CPE Credit: 1
Program Level | Intermediate |
Prerequisites | Financial Statement Analysis and Corporate Finance, or equivalent level of knowledge. |
Advance Preparation | |
Recent Revision Date | December 22, 2014 |
Instructional Delivery Method | QAS Self Study |
Field of Study | Specialized Knowledge and Applications |
Duration : 1 hour
- Sensitivity of DCF valuations to the assumptions made
- Using sensitivity analysis to improve the base case valuation
- Scenario analysis and Monte Carlo simulations