Comparision and Contrast of Dcf and Capm Essay Example

The definition of Discount Cash Flow is uses of future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.

The Discount Cash Flow shows that changes in long-term growth rates have the greatest impact on share valuation.The interest rate changes also make a big difference. . The Discount Cash Flow analysis is more flexible than any other individual ratio it also allows the investor the opportunity to look at the ability of the company to grow.

The Capital Asset Model is an economic model for valuing stoc