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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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To: Jim Mullens who wrote (952)6/14/2004 10:49:45 PM
From: rkral  Read Replies (1) of 2955
 
Jim, re "does DCF still understate the present worth of the company because of the discounting factors for risk (not the discount factor associated with the value of money/ interest rates)?"

DCF is merely the present value, i.e., an estimated interest-rate discounted value, of an estimated stream of future cash flows.

There is no "risk discounting", per se, AFAIK. The risks to the investor are that actual cash flows will be less than estimated and/or .. that actual interest rates will be greater than estimated.

Ron
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