For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

Question

Quizplus · Accepted Answer

Estimating the continuation value is important in valuing a planned expansion because it takes into account the long-term value of the firm beyond the forecasted cash flows, which is essential to determine if the expansion will generate sufficient returns to justify the investment.

For Valuing a Planned Expansion, in Addition to Forecasting Cash