An alternative to traditional discounted cash flow models is ________.

Question

Quizplus · Accepted Answer

Real option analysis model is an alternative to traditional discounted cash flow models. It takes into account the value of flexibility or options that a company may have in its investment decisions, such as the option to delay or abandon a project. This model recognizes that future uncertainties may impact the investment decision and provides a framework to evaluate the potential value of these options. The capital asset pricing model and dividend growth model are not alternatives to traditional discounted cash flow models, but rather complementary models used to calculate the cost of equity and dividend payments, respectively.

An Alternative to Traditional Discounted Cash Flow Models Is ________