Discussion on Uncertainty and Bias in Enterprise Valuation Assessments using DCF Model

DOI

10.2991/aebmr.k.220307.037How to use a DOI?

Keywords

enterprise valuation; DCF model; investment choices; financial assessments

Abstract

This essay aims to discuss the potential problems that may occur when using the Discounted Cash Flow model to value publicly listed firms by discussing the uncertainties and biases embedded in the valuation model.

Through analyzing the literature and reviewing a valuation assessment that is done by the author, the article concludes that the appropriateness of discount rate and the accuracy of the free cash flow cannot be computed perfectly and thus the final valuation result should be assessed with caution.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Pengxu Chen
AU  - Kaiyuan Zhang
PY  - 2022
DA  - 2022/03/26
TI  - Discussion on Uncertainty and Bias in Enterprise Valuation Assessments using DCF Model
BT  - Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
PB  - Atlantis Press
SP  - 236
EP  - 240
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220307.037
DO  - 10.2991/aebmr.k.220307.037
ID  - Chen2022
ER  -