Discounted Cash Flow Techniques Answer the Question Of

question 104

Multiple Choice

Discounted cash flow techniques answer the question of:

• A)Do the cash returns of the investment exceed the cash outlays?
• B)How does the present value of future benefits from the investment compare to the investment outlay?
• C)How long will it take to recover the original investment outlay?
• D)How much average profit is generated per dollar of average investment?

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Definitions:

Future Earnings

Expected future profits of a company, often used to assess its valuation or the potential return on investment.

Market Value

The current quoted price at which an asset or service can be bought or sold in a public marketplace.

Gordon Model

The Gordon Model, also known as the dividend discount model, is a method to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate.

Intrinsic Value

The actual, inherent worth of an asset, independent of its market value, often calculated by investors to assess a company's underlying value.