easy · Investment Banking valuation-core
An analyst calculates a DCF and determines the Enterprise Value is $1,200 million. The terminal value (using Exit Multiple Method) accounts for $960 million of that total.
What is a potential concern with this result?
- The company is not generating enough cash in the near term.
- The WACC used in the calculation must be too low.
- The valuation is heavily dependent on terminal assumptions.
- The company should be valued using trading comps instead.
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