Discounted Cash Flow (DCF) and Growth Models
Free CFA Level I lesson in Equity Investments. 15 min read, ~2,186 words.
Equity intrinsic value = present value of expected cash flows. Match the flow to the rate: equity flows discount at cost of equity, firm flows at WACC. Gordon Growth: V0 = D1 / (r − g). Requires r g and stable g forever; the numerator is next year's dividend, D1...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- DCF and growth models
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