Question

Which of the following is not an advantage of a dcf valuation? select all that apply.

O Is extremely sensitive to the cost of capital and perpetuity growth rates
O Requires a lot of inputs
O One of the soundest valuation techniques
OProvides an opportunity to learn about a business

Answer 1

DCF valuation, also known as discounted cash flow valuation, is a technique used in finance to determine the value of an investment. It has advantages such as providing an opportunity to learn about a business and being one of the soundest valuation techniques. However, it is not without disadvantages, as it is sensitive to the cost of capital and perpetuity growth rates and requires a lot of inputs.

Step-by-step explanation:

DCF valuation, or discounted cash flow valuation, is a commonly used technique in finance to determine the value of an investment. While there are several advantages to using DCF valuation, one drawback is that it is extremely sensitive to the cost of capital and perpetuity growth rates.

The accuracy of the valuation can be greatly affected by small changes in these factors. Additionally, DCF valuation requires a lot of inputs, including future cash flows and discount rates, which can make it a complex and time-consuming process.