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Discounted Cash Flow Models discussed: The Adjusted Present Value Model The Free Cash Flow to Equity Model What...

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Finance

Discounted Cash Flow Models discussed:

  1. The Adjusted Present Value Model
  2. The Free Cash Flow to Equity Model

What are the advantages and shortcomings of each?

Which one do you think is generally better to use? Why?

Answer & Explanation Solved by verified expert
4.0 Ratings (518 Votes)
The adjusted present value model is used for valuation when a given firm has changing capital structure The APV works like a Discounted cash flow model where the NPV of the firm is calculated presuming it is fully equity financed    See Answer
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