Question: 1. List in order which elements in DCF have the most effect in the firms value. Describe the issues with each element and how practitioners

1. List in order which elements in DCF have the most effect in the firm’s value. Describe the issues with each element and how practitioners resolve these issues.

2. What are the pros and cons of comparable (relative valuation, e.g. P/E)? How are comparable misused?

3. According to the McKinsey book, value is defined as follows.

Value= invested capital x ROIC x (1-g/ROIC) / WACC-g
Explain how value is created. What are some challenges implementing this formula?

4. How do Venture Capitalists value startups? What are the issues with their methods? Can DCF enhance their valuation?

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