Assume that 75% of net cash flow is free, so that we can use it for valuation of the company. Also, assume that the initial cash was $75,000, and the terminal value of the company in 2017 is $2M (Use the discounted cash flow (DCF) method to calculate the valuation of the company in 2017 where: 

(a) the discount rate is 15%; 

(b) the discount rate is 25%; and 

(c) the discount rate is 35%. 

Plot these three valuation measure on a single bar chart, and comment on the difference between them.

Answer rating: 100% (QA)

To calculate the valuation of the company in 2017 using the discounted cash flow DCF method we need to discount the projected free cash flows and the terminal value back to the present value using dif... View the full answer