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Problems with the discounted cash flow method : discrepancy between theory and practice

Seijdell, M.D. (2015) Problems with the discounted cash flow method : discrepancy between theory and practice.

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Abstract:This research focused on the issues that rise when valuating companies with the Discounted Cash Flow method. These issues are not covered by the DCF method, but could affect the valuation of a company. The aim of this research is to indicate whether the issues stated in theory are perceived the same as in practice and which issues should be incorporated into the DCF method. The contribution of this research to the existing literature is threefold. First, based on the findings in literature, a table has been formed, which to the best of the researcher knowledge’s summarizes all the issues that can be found in literature. Second, this research has indicated to what extent the issues are perceived the same in theory as in practice. Third, there is indicated to what extent incorporation of the issues is needed in practice. The main results indicate that most issues are perceived the same in theory as in practice. Valuators stressed that although these issues could influence the valuation, incorporation of those issues is not needed in practice. It can be concluded that none of the issues found both in theory as well as in practice, should be incorporated into the DCF method.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/67219
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