Series 79 practice questionmediumDCF Analysis
When constructing a DCF sensitivity table, which variables are most commonly flexed to produce an implied valuation range?
- ASG&A and COGS
- BTax rate and inventory turnover
- CPP&E and accounts receivable
- DDiscount rate and terminal value assumptions✓ Correct answer
Explanation
Why D — Discount rate and terminal value assumptions
Discount rate and terminal value assumptions have the largest impact on DCF value ranges. Flexing less material variables may miss the most sensitive drivers and understate uncertainty.
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