Use the following two statements to answer this question:
I.Discounted Cash Flow (DCF)methodologies are techniques for making capital expenditure decisions that are consistent with the overriding objective of maximizing shareholder wealth.
II.Discounted Cash Flow (DCF)valuation involves estimating future cash flows and comparing their present values with investment outlays required today.

Question

Quizplus · Accepted Answer

Both statements accurately describe the Discounted Cash Flow (DCF) method. Statement I correctly identifies the objective of DCF as maximizing shareholder wealth. Statement II accurately describes the valuation process involved in DCF, which involves estimating future cash flows and comparing their present values with current investments. Therefore, both statements are correct.

Use the Following Two Statements to Answer This Question