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anonymous

  • 5 years ago

Hi, Can anyone explain, why in some valuation models the sum of DFCF is divided by (1+ WACC)^(1/2). The reason of doing so is to eliminate the drawbacks of NPV assumption model, where cash flows occurring at the end of each period?

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  1. anonymous
    • 5 years ago
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    Just moves all cash flows to midyear cash flows... Nothing to do with NPV model but more a reaction to assuming that all cash flows occur at the end of each year rather than over the course of the year.

  2. anonymous
    • 5 years ago
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    Thank you Aswath

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