Page 27 - FINAL CFA SLIDES DECEMBER 2018 DAY 14
P. 27
LOS 49.m: Explain advantages and Session Unit 14:
disadvantages of each category of 49. Equity Valuation: Concepts and Basic Tools
valuation model., p.305
Advantages of discounted cash flow models:
• They are based on the fundamental concept of discounted present value and
are well grounded in finance theory.
tanties
• They are widely accepted in the analyst community.
Disadvantages of discounted cash flow models:
• Their inputs must be estimated.
• Value estimates are very sensitive to input values.
