Given that there are a minimum two ways to calculate the time value of money â discounted and non-discounted cash flow analysis, isn't it better to analyze projects requiring a large investment in capital assets using the discounted cash flow analysis rather than non-discounted cash flow analysis?
Why, or why not? Please explain in one to two paragraphs.
Given that there are a minimum two ways to calculate the time value of money â discounted and non-discounted cash flow analysis, isn't it better to analyze projects requiring a large investment in capital assets using the discounted cash flow analysis rather than non-discounted cash flow analysis?
Why, or why not? Please explain in one to two paragraphs.
Related questions
For 3M Company, Using the facilities of ValuePro (http://www.valuepro.net) for the company that you have selected to study conduct a discounted cash flow valuation. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable. The analysis should also examine the relevant cash flows, compare the final valuation to the stockâs current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)
| Intrinsic Stock Value | 145.06 | ||
| Excess Return Period (yrs) | 10 | Depreciation Rate (% of Rev) | 4.31 |
| Revenues ($mil) | 30052 | Investment Rate (% of Rev) | 4.96 |
| Growth Rate (%) | 7.5 | Working Capital (% of Rev) | 20.52 |
| Net Oper. Profit Margin (%) | 20.92 | Short-Term Assets ($mil) | 13855 |
| Tax Rate (%) | 28.972 | Short-Term Liab ($mil) | 6041 |
| Stock Price ($) | 156.73 | Equity Risk Premium (%) | 3 |
| Shares Outstanding (mil) | 690.2 | Company Beta | 0.8925 |
| 10-Yr Treasury Yield (%) | 5 | Value Debt Out. ($mil) | 4864 |
| Bond Spread Treasury (%) | 1.5 | Value Pref. Stock Out. ($mil) | 0 |
| Preferred Stock Yield (%) | 7.5 | Company WACC(%) | 7.55 |
