Introduction to Corporate Finance - Coursera
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  • Introduction
  • Corporate Finance - An Introduction
  • Time Value of Money
    • Discounting
    • Compounding
    • Annuity
    • Growing Annuity
    • Perpetuity
    • Growing Perpetuity
    • Taxes
    • Inflation
  • Interest Rates
    • APR and EAR
    • Term Structure
  • Discounted Cash Flow
    • Decision Making
    • Free Cash Flow
    • Forecast Drivers
    • Forecasting Free Cash Flow
    • Sensitivity Analysis
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  1. Discounted Cash Flow

Forecast Drivers

Several assumptions are required to forecast each of the components of FCF into the future.

It is impossible to make accurate assumptions and thereby compute accurate forecasts. However, the aim of DCF is to focus discussion and analysis on relevant issues.

By making assumptions about each of the components in the FCF formula, we can compute a forecast for FCF, which may or may not be accurate, but it sets up a framework for meaningful discussion.

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Last updated 4 years ago

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