Estimates of a stock's intrinsic value calculated with the free cash flow methodology depend most critically on ________.

Question

Quizplus · Accepted Answer

The terminal value used in the free cash flow methodology has a significant impact on estimates of a stock's intrinsic value. This value represents the expected cash flows beyond the forecast period and can account for a significant portion of the value estimate. Choosing an appropriate terminal value is critical to accurately estimating the intrinsic value of a stock.

Estimates of a Stock's Intrinsic Value Calculated with the Free