Principles and Pitfalls of Terminal Value in DCF

Antonín Dvořák

Master's thesis

Principy a nástrahy terminální hodnoty v DCF

Abstract:

The thesis deals with the topic of terminal value assessment in DCF models. Examining ten different techniques, the parameters behind, and the possible perils, its aim is to formulate the best practice for terminal value estimation. Afterwards, eleven of real business valuations are analyzed with the previously formulated best practice serving as a benchmark. Where possible, the impact of departures from the best practice on the estimated business value is quantified. The analysis confirms the hypothesis that practical terminal value assessments often diverge substantially from the best practice, which has a material impact on the resulting business value estimate.

Keywords

valuation reports, continuing value, terminal value, business valuation, valuation

Language used: English

Date on which the thesis was submitted / produced: 24. 8. 2007

Thesis defence

• Date of defence: 7. 9. 2007
• Supervisor: Eva Kislingerová
• Reader: Jiří Hnilica

Vysoká škola ekonomická v Praze

Master programme / field:
Ekonomika a management / Podniková ekonomika a management