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Question

Which of the following is NOT the feature of Discounted cash flow Analysis?

A It uses a discount factor to calculate the present value of expected returns Correct Answer Incorrect Answer
B It is less affected by the accounting practices and assumptions as it is focused on cash flows of a project Correct Answer Incorrect Answer
C It takes into account both the future cash flows from a project and the returns generated in the past Correct Answer Incorrect Answer
D All of the above Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

  Discounted Cash Flow analysis is forward-looking and depends more future expectations rather than historical results.   It is more inward-looking, relying on the fundamental expectations of the business or asset, and is influenced to a lesser extent by volatile external factors. ·It is focused on cash flow generation and is less affected by accounting practices and assumptions.

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