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DISCOUNTED CASH FLOW VALUATION
What is the core principle of DCF valuation?
Asset value today equals present value of future cash flows it generates.
When is an investment attractive based on DCF value?
When DCF Value exceeds current cost of investment, positive returns expected.
Why is WACC used as discount rate in Enterprise DCF?
Captures blended required return of equity and debt holders weighted by capital structure.
What is the main estimation risk in DCF models?
Small input errors compound across 5–10 years, materially distorting valuation.
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