DISCOUNTED CASH FLOW IN BUSINESS VALUATION FROM INVESTMENTS IN PUBLIC CORPORATIONS
Investment is the action of creating a profit by investing in a firm. An appraiser is required to do a business assessment of the company in order to determine the amount of value generated. Capital gains or dividends will accrue from investments in public corporations. Intrinsic value is a metric for determining the worth of a company's stock as a capital market investment. DCF (Discounted Cash Flow) is a method of calculating intrinsic value. The entire company is assessed using the Free Cash Flow to Firm (FCFF) technique. FCFF as a measure of the company's operations and success. The FCFF method considers a company's ability to pay dividends, buy stock, and repay debt holders. Capital or debt is an option that must be utilised in the company's actions. WACC (Weighted Average Cost of Capital) is an average rate of return used to calculate the cost of capital for debt and equity. Firms are less likely to create additional value for investors and creditors when the average cost of capital rises. WACC is a tool for determining if investing in companies with a capital structure is feasible. The debt-to-equity ratio and the weighted average cost of capital (WACC) are analytical methods for determining the best capital structure.
Free Cash Flow to Firm, Weighted Average Cost of Capital.